Traders seek protection from bond sell-off with derivatives
They rebuild positions as they buy new credit swaps which protect against writedowns, bond exchanges
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London
THE overhaul of the US$18 trillion credit-default swap market came just in time.
As plunging Greek, Italian, Spanish and Portuguese bonds ignite investor concern that Europe's sovereign debt crisis is returning, traders are seeking protection from turmoil with derivatives. Swaps on Greece rose for a fifth day, jumping 53 basis points to 683 basis points, while contracts on Italy increased 27 to 140, according to data provider CMA.
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