How to use credit default swaps when buying bonds

While CDS is still an institutional-only market, preventing retail investors and other corporations from being able to directly partake in it so far, non-active participants can still  keep up-to-date and learn from the wealth of important information that can be …

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Face of the market: CBS

CBS credit default swaps rose the most this year, or 13 bps, to 118 bps yesterday after investors worry about the effect a potential sale of the company’s outdoor advertising and billboard business could have on the current or successor …
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Reliance on CDS

One of India’s largest companies, Reliance Industries, has seen its credit default swaps drop significantly this year. As highlighted in Bloomberg,

Confidence in the owner of the world’s largest oil-refining complex surged this year as the company reported cash

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TEPCO swaps – 1 year later

As highlighted in Bloomberg,

Tokyo Electric Power Co.’s credit- default swaps plunged to the lowest in a year after Japan’s government agreed to a 1 trillion yen ($12.5 billion) bailout for the owner of the stricken Fukushima nuclear plant.

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Markit iTraxx Japan exceeds 200

The benchmark index (iTraxx Japan Series 17) of Japanese credit default swaps crossed 200 basis points this week closing most recently at 204 basis points. That level is the highest in over 5 months. The Markit iTraxx Australia CDS index …

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Relative value in global bank CDS

As highlighted in Bloomberg, The debt of banks is trading at the biggest discount to the broader corporate bond market since the depths of the funding squeeze in November as Europe’s sovereign crisis again threatens to rattle global financial

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Investors dropping on Nokia

Nokia credit default swaps got hammered hard last week after the company, formerly the world’s largest mobile handset maker until recently ceding that title to Samsung,  warned that first quarter results were weaker than expected amid competition. In addition, the

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Odds of bankruptcy

Excerpt from a CNBC highlight earlier today,

Odds of bankruptcy within 10 years (default probability)

American Banks
Bank of America 33%
Citi 32%
Goldman Sachs 34%
Morgan Stanley 42%

European Banks
Unicredit 45%
Nomura 42%
BNP Paribas 30%

Sovereigns
Spain …

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CDS futures continue to languish

The introduction of CDS futures (essentially envisioned as a standardized futures contract on a popular CDS index like the CDX to begin with) has yet to make any significant progress on its path to reality but does anyone really care?

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Quanto CDS from boom to bust


The International Financing Review (IFR) reported about a week ago that it appears the boom in quanto credit default swaps – specialized contracts used to manage or hedge foreign currency risk associated with sovereign CDS – is over and now

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