Template:M summ Credit Derivatives 2.1: Difference between revisions
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[[2.1 - Credit Derivatives Provision|The]] person against whose collapse you are hedging. This will generally be the [[issuer]] of a listed [[debt security]] — a | [[2.1 - Credit Derivatives Provision|The]] person against whose collapse you are hedging. This will generally be the [[issuer]] of a listed [[debt security]] — a {{cddprov|Bond}} — or at a pinch, a relatively public syndicated {{cddprov|Loan}}. A straightforward enough notion, complicated by the tendency for corporates to be taken over from time to time. What happens, for example, when [[Credit Suisse]], for some years now a basket case of a credit, with [[CDS spread]]s trading widely, becomes ''such'' a basket-case that, to stave off {{cddprov|Bankruptcy}}, it is acquired lock, stock and barrel by UBS? Is UBS a {{cddprov|Successor}}, and what should a credit derivative trader, who wisely bought protection on [[Lucky]] make of that its sudden return to comparative wellbeing in the arms of its rescuer? | ||
Latest revision as of 08:33, 20 May 2023
The person against whose collapse you are hedging. This will generally be the issuer of a listed debt security — a Bond — or at a pinch, a relatively public syndicated Loan. A straightforward enough notion, complicated by the tendency for corporates to be taken over from time to time. What happens, for example, when Credit Suisse, for some years now a basket case of a credit, with CDS spreads trading widely, becomes such a basket-case that, to stave off Bankruptcy, it is acquired lock, stock and barrel by UBS? Is UBS a Successor, and what should a credit derivative trader, who wisely bought protection on Lucky make of that its sudden return to comparative wellbeing in the arms of its rescuer?