Derivs - Credit

Standard Chartered Bank has used synthetic securitization to protect a $3bn pool of trade receivables, despite recent critical comments from the Bank of England’s David Rule about this method of risk transfer.

The People’s Bank of China (PBoC) surprised the market by cutting benchmark interest rates and the RRR at the weekend. Short swaps have been well offered in response and the curve is steepening as the central bank move combines with expectations for an equity rebound, writes Deirdre Yeung of Total Derivatives.

It has been said that Greece’s influence within the eurozone seems to outweigh its size. After all, its GDP is less than 2% of the total in the currency bloc using 2014’s numbers at current prices.

This week's recovery in European credit spreads has put basis in play for traders, with credit default swaps having largely outperformed cash bonds on the Greece-led move tighter.

LCH.Clearnet said this week that its CDSClear service had started clearing the iTraxx Senior Financials index, along with the single name constituents of its different series.

This week’s recovery in European credit spreads came undone on Wednesday, as international creditors rejected the Greek government’s debt deal proposals.

European credit spreads on Tuesday held on to the ground they had gained in Monday’s big rally, but the end of the day was notably weaker without further news on a Greek debt agreement.

Commerzbank has added to its credit trading capabilities in London by hiring an experienced structured credit specialist.

The potential for options to both magnify and soften credit blow-outs was demonstrated this week, as Greek default fear gripped the market and sent credit index spreads surging wider.

There are many words synonymous with the European sovereign debt crisis, the portmanteau Grexit being the most in vogue. But a word that the European Central Bank hoped it had banished — contagion — has returned to the discourse this week.

Macro themes are dominating fixed income markets, but investors shouldn’t lose sight of the idiosyncratic stories that are unfolding in the background.

Peter Higgins, former partner and global head of long-only credit strategies at BlueBay, has left the asset management firm.