Derivs - Credit

Changing the selection rules for the CDX HY index, which references the debt of US high yield companies, should make it more useful for investors as a hedge against cash bonds. But the even better news is that Markit and CDS market makers seem to have learned from the experience of last year's changes to Europe's equivalent, the iTraxx Crossover.

Back in 2010, Brazil’s finance minister Guido Mantega warned that the world was in the midst of a “currency war” in the wake of US quantitative easing. The term is now back in vogue after China made the shock decision to devalue its currency.

UBS has overhauled the senior management of its trading business, as Kevin Arnold, head of FX, rates and credit for the Americas, has been given a new cross-asset role that includes equities.

Markit has agreed to buy CoreOne Technologies, a provider of regulatory reporting, index management, data management and prime brokerage services to financial institutions.

Nomura has cut at least 20 people from its credit trading business, according to two sources outside the bank, with the high yield business hit particularly hard.

Jefferies has boosted its high yield trading business in London with the hire of a senior trader from Societe Generale.

Credit Suisse has moved fast to appoint a director in high yield sales at its London office after the retirement from the business of long-serving Emma Balaam.

Puerto Rico’s electricity authority has made a proposal to restructure its debt that could mean bondholders recover between 65% and 70% of principal in an exchange offer, following a default on the island's other debt over last weekend.

Spain is often held up as an example of how austerity works, and Markit data published on August 5 provides some support to this view.

The equity 0% to 10% tranche of iTraxx Crossover this week came under selling pressure amid a gapping out of some of the already weaker credits, with Abengoa leading the rout and now vying with Norske Skog to be the index’s riskiest constituent.

Credit default swaps referencing Brazil hit their widest levels of the year this week, with the continuing crash in commodities weighing heavily on those names most exposed and adding to a raft of other woes for the country.

One area of European credit not reflecting the global market's more bearish tone this week was iTraxx options trading, where traders reported plenty of demand among participants to sell volatility even as spreads continued to widen.