CDS = Credit Default Spread ou CDS = Credit Default SWAP «A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults. It was invented by Blythe Masters from JP Morgan in 1994... When entering into a CDS, both the buyer and seller of credit protection take on counterparty risk:... Credit default swaps can be used by investors for speculation, hedging and arbitrage. ... Regulatory concerns over CDS The market for Credit Default Swaps attracted considerable concern from regulators after a number of large scale incidents in 2008, starting with the collapse of Bear Stearns. ... Also in September American International Group (AIG) required[citation needed] a federal bailout because it had been excessively selling CDS protection without hedging against the possibility that the reference entities might decline in value, which exposed the insurance giant to potential losses over $100 billion. ... Credit default swap and sovereign debt crisis ... The European sovereign debt crisis resulted from a combination of complex factors,... fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socialising losses. The Credit default swap market also reveals the beginning of the sovereign crisis. ...»
Posted on: Thu, 11 Jul 2013 14:54:56 +0000
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