A credit-default swap
contract is similar to insurance on a bond, but the purchaser doesn't need to own any of the underlying debt to buy one.
Morgan Stanley is arguing that the structuring bank had a conflict of interest at it stood to benefit from credit-default swap
payouts and the bank breached its obligations by embarking on a "firesale" of defaulted loans in a bulk auction before the deal matured.
A basis point on a credit-default swap
protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
The French bank said that Anglo Irish Bank Corp's offer to swap subordinated bonds for new notes could trigger payouts on as much as USD420m of credit-default swap
Because a credit-default swap
was deemed neither insurance nor a transaction otherwise regulated by the federal government, issuers were not required to set aside adequate capital reserves to stand behind the guarantee of CDOs.
"We expect further pressure on the Dubai credit-default swap
Wachovia, a unit of Wells Fargo (NYSE: WFC), has won a suit that accused it of forcing a hedge fund to make higher margin payments than necessary on a credit-default swap
Citigroup, Inc (NYSE: C) has filed a lawsuit against Morgan Stanley (NYSE: MS) related to a credit-default swap
The suit is claiming that the bank forced a hedge fund to make higher margin payments than necessary on a credit-default swap
. US District Judge Laura Taylor Swain has retained one of eight claims brought against the bank by VCG Special Opportunities Master Fund Ltd.
Malafronte trades both cash bonds and credit-default swaps
The Markit iTraxx Europe Index of credit-default swaps
insuring investment-grade corporate bonds rose by the most since 2007, according to prices compiled by Bloomberg.
insuring the sovereign notes of Southeast Asia's fastest growing economy have dropped 26 basis points this year to 87.8 basis points.