Tuesday, August 08, 2006

credit default swap chaos!

ein guter bericht zur wunderwelt der nicht regulierten derivate. danke geht hier mal wieder an mish
http://www.markettradersforum.com/forum1/1416.html
http://www.bloomberg.com/apps/news?pid=20601085&sid=akawlrzGNkm4&refer=europe

zur erläuterung: bei den cds handelt es sich um absicherungen gegen das risiko das anleihen von unternehmen nicht zurückbezahlt werden.

Credit-Default Swap Market Whipsawed by Verizon, Rentokil Debt

highlights:

Companies in the process of restructuring are whipsawing the $346 billion credit-default swap market, where money managers bet on the ability of corporations to pay their debts. (würde fast vermuten das der markt deutlich gößer ist / siehe beispiel von delphi!)

Unexpected price changes for credit-default swaps, financial instruments typically based on corporate bonds and loans, are setting off alarms on the trading floors of the biggest banks and securities firms.

Similarly, hedge funds were roiled after credit-default swaps of London-based Rentokil Initial Plc plunged 80 percent in value when the pest exterminator decided to issue debt through a new holding company

So far, regulators aren't voicing concerns. Last August, the Federal Reserve Bank of New York chastised some of the biggest financial firms, including New York-based JPMorgan Chase & Co., the third-biggest U.S. bank, and Goldman Sachs Group Inc., the most profitable securities firm, for allowing 150,000 credit- default swap contracts to remain uncompleted, leaving traders unsure of their obligations. (schon klar das 150.000 nicht geschlossenen bzw nicht zuzuordnende kontrakte kein thema sind.........wird wohl erst dann ein thema wenn es zu spät ist)

The increase in M&A has helped make credit-default swaps the fastest, growing part of the market for derivatives, financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.

For investors in credit-default swaps on Rentokil Initial 1927 Plc, the previous financing unit, the switch meant there would be no debt left within three years. Prices for five-year contracts on 10 million euros ($12.8 million) of debt dropped to as little as 19,000 euros in May from more than 100,000 euros last year.

When Standard & Poor's, Moody's Investors Service and Fitch Ratings cut General Motors Corp.'s credit ratings to below investment grade last year, the credit-default swaps soared. Investors were paying as much as $2.9 million to protect $10 million of the automaker's bonds in December.

Credit-default swaps also are used by money managers as a cheaper and quicker alternative to buying and selling bonds. When Delphi Corp. filed for bankruptcy on Oct. 8, there were $20 billion of credit-default swaps related to its $2 billion of bonds. ( 10 x mehr cds als zugrundeliegende anleihen!)

Credit-default swaps based on Alltel Corp., the fifth- largest U.S. mobile-phone company, dropped by 76 percent after the Little Rock, Arkansas-based company spun off its local telephone division on July 17.

Other companies that rocked the market include VNU NV, the owner of Billboard magazine, which was acquired by a group led by Kohlberg Kravis Roberts & Co. Haarlem, Netherlands-based VNU's credit-default swaps doubled to a record after it announced a sale of bonds last month that would rank behind $1.4 billion of debt issued by another VNU unit in the event of a bankruptcy. (paßt gut zu diesem bericht von kkr
http://immobilienblasen.blogspot.com/2006/08/rekordramschanleihe.html)

glaube manchmal ist es besser man weiß überhaupt nicht was hinter den kulissen alles abgeht.
das ganze sieht mir danach aus als wenn demnächst auch mal schief gehen könnte. ist fast ein wunder das wir bisher keine größeren defaluts/schieflagen gesehen haben.

gruß
jan-martin

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