Bond Traders Seen Moving to CDS Indexes to Hedge ECB Taper: BAML
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
Tickers
2539Z GR (European Central Bank)
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UUID: 7947283
(Bloomberg) -- Even though rates volatility is subdued, investors are gravitating toward credit-default indexes to avoid risks of holding illiquid corporate securities as the ECB prepares to scale back bond purchases, Bank of America Merrill Lynch strategists say.
- “We see that in an environment where eventually rates and rates volatility rises amid ECB tapering, credit investors will shift back to the more-liquid CDS index market to manage credit risk,” according to report published Wednesday
- Almost 95% of the total risk traded in the CDS market is via CDS indexes: BAML
- CDS index trading volumes multiply when there is a significant rise in market volatility, providing safe haven for credit traders: BAML
- Liquidity in CDS indexes positively correlated to market volatility
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
Tickers
2539Z GR (European Central Bank)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283