When ratings get politicized (Part 2)
Continued from Part 1… East vs. West (and by this we don’t mean a New York-Cali thing) Separate from its NRSRO application, Dagong had already irked the rest of the western credit rating agency...
View ArticleCredit default swaps get another temporary exemption
The SEC recently extended “temporary” exemptions from the Securities Exchange Act for credit default swaps to allow for the anticipated implementation of the new Dodd-Frank Act which is meant to...
View ArticleThe beginning of the end for European Financial CDS?
EU proposals to write-down the debt of European banks in the event of another financial crisis could render the billion-dollar market of of credit default swaps referencing European banks worthless if...
View ArticleHugh Hendry turns out to be ‘right’?!
While no one usually wishes bad fortune to any group of people of things in life – the structure or setup of modern financial markets (especially derivatives) and capitalism seems to still have a way...
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69 CDS positions
An interesting post by Zerohedge outlines 69 companies whose credit risk is ranked better than the United States government as determined by credit default swap prices (see first chart below). This is...
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Sovereign credit risk more risky than corporates
The WSJ recently highlighted an occurrence that has been in place in different locales including the United States for quite a while now: market perceptions of credit risk that appear to be somewhat...
View ArticleWhen sharing risk actually increases risk
Based on the statements provided, (d) Bankers do not like to share good things and will only share bad things follows. The premises are positive and universal (logically speaking. No actual...
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The Rising Fear in Bank CDS Prices
Earlier this week, Andrew Atkeson and William E. Simon Jr., a couple professors at UCLA, wrote an Op-ed in the Wall Street Journal entitled “The Rising Fear in Bank Stock Prices” discussing how the...
View ArticleGuess what the CDS price would be
If you guessed then I hope you are right but we certainly don’t know exactly what it would or should be. Priceline sold $1 billion of 1 percent notes due March 2018 that may convert into 1.06 shares...
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Collateral (Call) Damage – no pun intended
All those margin and collateral calls that JP Morgan Chase likely faced on its massive “London Whale” CDS trades likely had further reaching effects on several other related derivatives. Despite total...
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