New benchmark contracts for US$17t credit swap mkt

[LONDON] The biggest overhaul of the global credit derivatives market started on Monday with new benchmark contracts addressing flaws that prevented some bondholders from being fully compensated for losses.

The shake-up of the US$17 trillion credit default swap market increases the cost of insuring junior bank bonds and sovereign debt because new contracts offer investors greater protection. The benchmark for swaps linked to high-yield borrowers is also being broadened to reflect the growth of the...

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