Rallye Short Sellers to Collect $522 Million Payday on Credit Swaps

In this article by Bloomberg Katie Linsell described the latest CDS triggering. The underwriters will pay collectively around half a billion. That represents coverage of around 87% of the bonds. The unsecured creditors (not covered by the CDS) will have their debt converted to common shares, which will make them the new owners of the company.

The single item that sticks out is the size of the CDS: just one default is costing $0.5 bn.  With corporate bond market at all time high – over $24 trillion– the CCPs appear as weak as ever. Only backing their deals with Deriveum would create certainty of payment for CDS holders.

To check the Bloomberg article, please click on the link below

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