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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 CDS market was the use of CDS by market participants as purely speculative tools. In this case, the players that hold the debt are hedging their exposure through CDS and capitalizing on a negative basis play. If hedging debt exposure through CDS becomes the next true villain in the attack on derivatives, there is really no hope for this market.
Credit default swaps threaten newspaper cos. [The Deal]

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