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Hedge Fund Meltdown Rumors: Chapter WhateverWhispers Of Meltdowns from Credit Derivatives And Natural Gas

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Rumors have been swirling around about two separate hedge fund meltdowns. According to one set of rumors a multi-strategy hedge fund facing impending doom due to leveraged bets in credit derivatives. Entirely different sources have mentioned a major meltdown from natural gas bets. DealBreaker calls to some of the usual suspects could not confirm the identities of the allegedly troubled funds.
And we’re not naming the names being whispered because life is hard enough without getting called out on DealBreaker as a meltdown candidate when things might be going just fine.
Both rumored meltdowns are plausible given recent market movements. The credit markets have been rocked by a level of volatility unseen in recent times. Earlier today Bloomberg reported that many large financial institutions believe that hedge funds are using too much leverage to finance credit derivative investments, according to a Fitch
Ratings survey of 65 banks, insurers and money managers.
Natural gas futures prices are flat to down, and the spread between summer-winter season is narrowing. The spreads in future contracts fell from $2.50 to pennies in two weeks. Similar movements in the markets for natural gas futures helped bring down Amaranth last year.
If you’ve got a likely candidate for either rumor—natural gas or credit derivative blow-up—feel free to leave a comment below or email us at
Derivatives Banks Concerned by Hedge Fund Leverage Bloomberg]