.......
Spain, Italy

Investors have focused wagers on debt of industries and countries that may be most affected by a credit crisis entering its 15th month. The Spanish economy is headed toward its first recession in 15 years amid a slump in its housing market and banking and finance shares have dropped as the credit seizure caused some to collapse.
.........

Contracts on Spain climbed to 112 basis points on Oct. 24, from about 47 basis points at the start of September. They have since dropped back to 79 basis points.

Iniciado por Hearts

Credit Default Swaps
A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff if an underlying financial instrument defaults.[1] CDS contracts have been compared to insurance, because the buyer pays a premium, and in return receives a sum of money if a specified event occurs. However, this is a slightly misleading comparison because the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event.

Obtenido en Credit default swap - Wikipedia, the free encyclopedia

Atención esta frase de el párrafo anterior es muy importante:
.. the buyer of a CDS does not need to own the underlying .. = "el compardor del CDS no necesita poseer el subyacente"

Iniciado por MNSV

Por cierto, hoy subasta de los CDS de Glitnir, el banco islandes quebrado.

Se pagará a 1 céntimo por euro.

Y mañana hay subasta de otro banco islandés, el Kaupthing.

Bloomberg.com: Worldwide

Iniciado por El_Presi

Bloomberg.com: Worldwide

Depository Trust to Provide Credit-Default Swaps Data (Update3)

By Shannon D. Harrington

Nov. 4 (Bloomberg) -- The broadest set of data yet on the credit-default swaps market will be released today as traders in the market say concerns about potential losses from the more than $47 trillion in outstanding contracts are overblown.

The Depository Trust & Clearing Corp., which operates a central registry of credit swaps trades, will publish details including the top 1,000 contracts on its Web site after 5 p.m. New York time. The data is being released after pressure from regulators for more transparency about risks in the market after trading exploded the past decade. The data will for the first time offer a clearer picture of the amount wagered on the creditworthiness of the world's companies and governments.

The industry should ``get the word out about the small size of these risks compared with the notional amounts on which the contracts are based,'' said Mark Brickell, chief executive officer of Blackbird Holdings Inc., which provides an electronic trading system for derivatives, and former chairman of the International Swaps and Derivatives Association.

The industry has stepped up efforts to counter critics among U.S. lawmakers and regulators who say the lack of transparency in the market exacerbated the financial turmoil. The collapse of Lehman Brothers Holdings Inc. contributed to a decline in financial markets last month because no one knew how many contracts were outstanding on the securities firm, or who had held them. Estimates ranged as high as $400 billion, though the actual amount turned out to be $72 billion, the DTCC said.

After subtracting redundant trades, only $5.2 billion had to actually change hands, DTCC said last month in what was its first release of data from the warehouse.

Stop `Misinformation'

Even the size of the market is up for debate. ISDA says more than $47 trillion of contracts are outstanding, while the DTCC puts the figure closer to $35 trillion.

``The credit derivatives market is in need of PR to stop the flow of misinformation we continually hear,'' said Tim Backshall, chief strategist at Credit Derivatives Research LLC in Walnut Creek, California. The DTCC data ``should help,'' he said.

The DTCC, which matches and confirms 90 percent of electronic trades from the biggest dealers in the market, will list the companies and countries linked to the most credit- default swaps, including both the gross amount and a net figure that excludes offsetting trades between two parties.

Market Criticism

Criticism of the market intensified in September after the collapse of Lehman and the U.S. government's bailout of American International Group Inc., which faced bankruptcy after credit- rating downgrades forced it to post more than $10 billion in collateral on credit swap trades that had plunged in value. Auctions this week will settle default swaps on the combined 43 billion euros ($55 billion) of debt of Iceland's three biggest banks, starting today with Landsbanki Islands hf.

U.S. Securities and Exchange Commission Chairman Christopher Cox called for authority to regulate the credit swaps market, saying the lack of disclosure and the web of connections between dealers in the market threatened the stability of the financial system. The Federal Reserve Bank of New York, which has spent the last three years pushing dealers to curb risks in the credit swaps market, last week said it welcomed the DTCC's disclosure.

Transparency

``We need transparency,'' said U.S. Representative Bob Etheridge, a Democrat from North Carolina who heads the subcommittee that oversees the Commodity Futures Trading Commission, which is also seeking authority to regulate the market. ``Sunlight has a way of purifying a lot of things and sanitizing them, and that's why I think transparency is so critical in this area. You're dealing in substantial dollars.''

Separately, the European Central Bank met with regulators, lenders and investors yesterday to discuss ways of increasing transparency in the default swaps market. A central counterparty is an ``appropriate solution'' for reducing risk, the ECB said in a statement.

The DTCC's data will show the total dollar amount of contracts in its registry, including a breakdown of contracts linked to individual companies or governments and those tied to an index of companies. It also will show registered contracts that are tied to residential and commercial mortgage bonds and corporate loans. Starting next week, it will post trading volumes during the previous week.

DTCC Board

DTCC is controlled by a board of members, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and other dealers that created and control trading in the credit-default swap market. Trading exploded during the past decade as the market went from being largely a tool for banks to hedge loans to a place where hedge funds, insurance companies and asset managers could speculate on the creditworthiness of companies, governments and other borrowers, including homeowners.

Until now, publicly available data on the market was largely limited to bi-annual surveys by ISDA and the Bank for International Settlements, that showed the gross notional value of trades outstanding for the entire market, a number akin to trading volume.

``The risk to the market from these instruments would be far less if investors had the benefit of basic disclosures,'' Cox wrote in an opinion column today in the Washington Post, in which he repeated his call for authority to regulate the market. ``The lack of transparency around credit-default swaps played a role in the collapse of AIG and contributed to the crisis of confidence that has enveloped other financial institutions.''

To contact the reporter on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net
Last Updated: November 4, 2008 13:43 EST