• News, Ratings Agency

    What Are You Paying Ratings Agencies Zero Dollars For, Anyway?

    Fitch released a report today saying “ohmygod banks Europe” and the market went down and maybe there’s a causal link, whatever. The report mostly takes notice of US banks’ European exposures in general, and the mystery of net versus gross derivatives exposure in particular, in which one asks “if Bank A sells CDS on $100bn […]

    / Nov 16, 2011 at 7:14 PM
  • News

    In Which Gretchen Morgenson Gets Credit For Understanding Derivatives

    Here’s a trade. I’ve got these bonds, see? I will sell them to you. You will pay me $100 and get $100 face amount of bonds (if you like, you can get $80 or $120 face value of bonds, depending on where the bonds are trading – but let’s make them par bonds, to keep […]

    / Nov 8, 2011 at 11:04 AM
  • News

    If You’re Not Into Greek CDS Any More, Maybe You Can Buy This Monstrosity

    We’ve noted here before the irony that Europe is both (1) screwing with your ability to get paid on CDS on shaky European sovereign debt (sort of) and (2) hoping people will buy more shaky European sovereign debt because they can get tradeable first-loss protection, suspiciously reminiscent of CDS, from the EFSF on those bonds. […]

    / Oct 28, 2011 at 1:43 PM
  • News

    Mandatory Greek CDS Post

    The Greek CDS situation is sort of puzzling, but it’s possible, and popular, to overstate its puzzlingness. We have probably been guilty of doing so in the past. In brief: if you hold Greek bonds, you sort of have to hand them over and get back other, shinier Greek bonds with half the face value. […]

    / Oct 27, 2011 at 1:08 PM
  • News

    A Conundrum

    The EU authorities propose to entice investors to return to buying peripheral sovereign bonds by offering tradeable first-loss protection on those bonds. This protection is described as functioning like credit default swaps. At the same time, the EU authorities assert that the solution to Greece’s sovereign debt overhang is for private holders of Greek debt […]

    / Oct 24, 2011 at 2:41 PM
  • News

    CDS Levels May Not Be The All-Purpose Indicator That WSJ Thought They Were, Reports WSJ

    The New York Fed and the Wall Street Journal have both been studying how liquid the CDS market today and have released their conclusions today. Short answer: not that liquid. From the WSJ: In recent years, credit-default swaps—contracts that give the buyer the right to collect a payment from the seller if a borrower defaults […]

    / Sep 28, 2011 at 1:04 PM
  • News

    Jean-Claude Trichet: If You Buy Greek CDS, You Will Be Sorry

    We don’t spend much time with Jean-Claude Trichet, the president of the European Central Bank, and really that’s our loss because he is quite the charmer, though less seductive and/or rapey than other French international bankers who come to mind. Last week he sat down with a French magazine for an interview that was released yesterday, […]

    / Jul 28, 2011 at 5:30 PM
  • News

    JPMorgan Looking On The Bright Side Of Sovereign Debt Crises

    JPMorgan equity strategist Thomas Lee put out a glass-half-full note yesterday titled “Corporates are the new “sovereigns”: 22 stocks to own around sovereign default.” Apparently there are a lot of companies who have their shit together more than Congress does: Over the past year, an increasing share of US corporates are seen as having LOWER […]

    / Jul 22, 2011 at 12:17 PM
  • News

    Blanche Lincoln’s Derivatives Provision All But Dead Now

    Blanche Lincoln’s famed derivatives legislation, which would basically prevent any big bank from ever trading CDS again, has already been chastised by Barney Frank. Now, a senior Treasury official has essentially delivered another blow to the Lincoln legislation.

    / May 26, 2010 at 4:50 PM
  • News

    Germans Ban on Naked Short-Selling Just Fueling More Fear

    Say “auf Wiedersehen” to naked short selling in Germany. Because of “exceptional volatility” in euro-area government bonds and credit-default swaps, massive short-selling was leading to excessive price movements which “could endanger the stability of the entire financial system,” Germany’s BaFin financial services regulator said today.

    / May 18, 2010 at 5:20 PM
  • News

    Don’t Drink The Water: The Great CDS Colonial Reversal

    The following post is by a hedge fund manager friend of DB who shall remain nameless. He runs the emerging markets desk at his firm. It’s the financial version of Montezuma’s revenge! The meltdown in Western European sovereign credit has led to a Great Colonial Spread Reversal. Until now, only select Anglosphere colonies had posted […]

    / Feb 8, 2010 at 4:58 PM
  • News

    Superfluous CDS Clearinghouse Earns Wall Street’s Pity, Handful Of Trades

    In early October of 2008, Ken Griffin and his partners-in-crime at the Chicago Mercantile Exchange had a dream. It was a dream of bringing “stability and transparency” to the credit-default swap market in such a way that would “reduce much of the systematic risk inherent” in those crazy derivatives. That December, the CMDX clearinghouse/trading platform […]

    / Dec 3, 2009 at 1:55 PM
  • News

    New CDS Indices Sure To Calm Investor Fears

    For those in the ‘CDS are weapons of financial mass destruction’ camp, today is not your day. Due to the prevalence of major industrialized countries putting their fiscal problems on their credit cards and turning themselves into emerging market nations, Markit plans to launch four news indices focused on sovereign default risk. While the sovereign […]

    / Jun 29, 2009 at 12:18 PM
  • News

    It’s Time To Blame CDS Again

    The CDS witch hunt is turning from the auto industry to the newspaper industry. Several newspaper companies recently failed to gain meaningful interest in their debt exchange offers because the majority of the bondholders were hedged through CDS and, consequently, had no incentive to agree to the exchange. One of the primary complaints about the […]

    / Jun 23, 2009 at 2:19 PM
  • News

    A Historic Day

    Of course, history will be made today. After a long buildup, today is the big day. Can you feel the anticipation? We can. You will have to wait until this evening for your release, though. Of course, we refer to the release by the DTCC of CDS information at 5pm Eastern time today.

    / Nov 4, 2008 at 2:07 PM
  • News

    Iceland CDS Payouts: ~$7 Billion

    Bloomberg is spinning this as “even bigger than Lehman,” but that seems backwards to me. Shouldn’t it be “Lehman CDS payouts nearly as large as entire country meltdown CDS fallout” ? The auction was the first of three being held this week to settle credit-default swaps after the Icelandic government seized its three biggest banks […]

    / Nov 4, 2008 at 12:10 PM
  • News

    But Other Than That? Fine.

    So other than totally cratering and taking with it all its equity holders, Lehman is doing just fine today. The CDS settlement, you know, the one everyone was worried about, turned out to pan out nicely. Or so far it has. Kudos to Felix Salmon for having called that one nicely. Fears about Lehman CDS […]

    / Oct 21, 2008 at 12:29 PM
  • News

    Dangerous Alliances (Morning Wordgame Edition)

    I doubt there could be a much more direct indicator of how absolutely abysmal things are than New York and federal prosecutors cooperating on anything. Perhaps its when the New York Times calls Credit Default Swaps, the dangerous new focus of this probing probe, “the insurancelike securities.” To help you navigate the difficult waters of […]

    / Oct 20, 2008 at 9:29 AM
  • News

    Presented Without Comment: Uh Oh.

    Reuters Group CDS spreads. Source: CMA DataVision

    / Oct 14, 2008 at 2:05 PM
  • News

    Halloween Comes 10 Days Early This Year

    October 21st is the day to watch. Lehman debt having priced at below $0.09 on the dollar, CDS contracts will have to settle now. Vipal Monga over at The Deal hints that a notional amount figure might run as high as $400 billion. (Total senior unsecured debt outstanding at Lehman was something like $110 billion […]

    / Oct 11, 2008 at 2:47 PM
  • Lehman

    Lehman CDS Spreads Widen, Outpacing Wall Street Rivals

    The cost on insuring Lehman’s debt has climbed from 130 basis points in late April to 387.5 basis points today. The credit default swaps, which are contracts insuring Lehman’s senior debt, appear to show high levels of skepticism about the firm’s financial health, according to some traders. Yesterday the cost of insuring $10 million of […]

    / Aug 19, 2008 at 1:40 PM
  • DealBreaker Career Center

    Job of The Week: Make The Debt Markets More Transparent

    We like to end every week with a special gift for our readers: we’re finding you a new job. So we spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But one special one has been […]

    / Feb 15, 2008 at 3:19 PM

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