When credit default swap sellers move to quoting upfront prices, the writing may be on the wall. Today's graffiti victim? Citi.
Sellers of credit protection in the credit default swaps market were asking to be paid on an upfront basis to insure Citigroup's subordinated debt on Tuesday, traders said, a sign of greater perceived risks at the third-largest U.S. bank.
Five-year credit default swaps on Citigroup's subordinated debt were quoted around 9.5 percent upfront, or $950,000 in upfront costs to protect $10 million of debt, plus annual payments of $500,000 a year, according to a trader.
There are so many things to watch during this slow-motion train wreck that it is hard not to miss something. We're running out of popcorn here, people.
Citigroup sub CDS moves to upfront basis - traders [Reuters] via Alea