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CDS Traders Refuse To Shift Focus Away From UK And France

Tyler Durden's picture




 

For the 4th week in a row, the UK is a top derisking name not just in sovereigns but in all DTCC tracked names. With $385 million in net notional derisking, in 227 contracts, the UK was the top 2 derisking name, with the surprising appearance of Brazil in the top spot at $460 million. Far less surprising was the 3rd name on the list: France continues to be in the top 5 derisking names week after week. Other notable names that complete the top 10 deriskers: Argentina, Germany, Australia, Korea and Japan. And the proof that corporates are now secondary to gambling in sovereigns, the top corporate derisking name, Enel SPA came in at a mere 191 million in notional, a ways away from the top three, all consisting of sovereigns. The same is true on the rerisking side, where of all 1000 names, the top 5 reriskers were all sovereigns (Italy, Spain, Portugal, Greece and Austria).

Top deriskers:

Top reriskers:

All sovereign names:

 

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Wed, 05/19/2010 - 17:39 | 361684 etrader
etrader's picture

UK comes out with its "Savings" plan on Monday (24th) before the  emergency budget on Tuesday, June 22, for added derisking.

 

Wed, 05/19/2010 - 17:56 | 361716 ratava
ratava's picture

i see rerisk of periphery and derisk of core EU. all for one and one for all. brits will join the euro eventually, the question is do they devalue and/or default first.

Wed, 05/19/2010 - 18:49 | 361794 Duuude
Duuude's picture

Ah shit, I thought it said de-frisking.

Wed, 05/19/2010 - 17:56 | 361719 AxiosAdv
AxiosAdv's picture

Rerisking Spain?  LOL - yeah because they are in such better shape than the UK or France.  

Wed, 05/19/2010 - 17:59 | 361725 ratava
ratava's picture

no it is because if eu fails it fails together so why sell Spain when you can sell Germany.

Wed, 05/19/2010 - 18:50 | 361797 Duuude
Duuude's picture

Yeah, re-frisking.

It's GS-talk.

Wed, 05/19/2010 - 18:21 | 361752 hedgeless_horseman
hedgeless_horseman's picture

I don't know about UK and France.  I find it is hard to shift focus away from Eastern European assets:

http://www.youtube.com/watch?v=PKd9RuasDQw&feature=fvhl

Wed, 05/19/2010 - 18:39 | 361777 Budd Fox
Budd Fox's picture

To trade the risk game , go and check the TOTAL debt to GDP ratio, not just the public (Govts) but the private as well. Surprisingly, Italy is the best overall off. The Italian families are very lightly indebted, the public debt is , yes, a burden, but is 97% in the hands of Italians...i.e. the Govt overspends, yes, but the country did not shoved their bills in the hands of nobody else and, last but not least, the Banks are so stodgy and conservative ( the local ones..not the foreign branches) that they still lend for mortgages with a 50% deposit...or they don't.Unicredit is the only risky bank there , basically because they inherited a lot of east european and greek and so on crap on the books when they took over a German bank few years ago.Not surprised to see them rerisked...

Wed, 05/19/2010 - 19:32 | 361854 Mitchman
Mitchman's picture

Your points are well taken.  Then why did the government remove the requirement to mark assets to market?

Wed, 05/19/2010 - 21:50 | 362087 Budd Fox
Budd Fox's picture

Because remaining the only good boy in  a very bad neighborhood makes you look dumb...the first to glorify mark to fantasy was Uncle sam remember?

 

Now, if everybody devalues...you have to get along or be run over.

If evrybody cheats rules...why you can and I cannot?? That is what is called...moral hazard??

Wed, 05/19/2010 - 23:08 | 362218 Mitchman
Mitchman's picture

Agreed.  Well put.

Wed, 05/19/2010 - 22:48 | 362193 Grand Supercycle
Grand Supercycle's picture

 

EURUSD buying support is still evident.

Daily chart is now extremely oversold, will post a chart soon.

http://stockmarket618.wordpress.com

http://www.zerohedge.com/forum/latest-market-outlook-1

Thu, 05/20/2010 - 01:25 | 362323 Lux Fiat
Lux Fiat's picture

I am not a yield curve expert, but when I looked at the yield curves available to the general public on Bloomberg a week or so again, the Brazilian one stood out.  Having seen the progression of the Greek yield curves on ZH, it looked remarkably similar to Greece in late Mar/early April, starting to pancake, but not quite there.   http://www.bloomberg.com/markets/rates/brazil.html

Not entirely surprised that they beat out the UK and France for top honors.

Thu, 05/20/2010 - 01:41 | 362334 nobita
nobita's picture

ok would someone be kind enough to explain to me why anyone would ever buy a CDS on norway?

 

Thu, 05/20/2010 - 03:41 | 362413 Albatross
Albatross's picture

It's probably just to cover up your CDS portfolio to comply

w/your algorithm, err, rules.

Its only 12 contracts, no big deal really.

 

Thu, 05/20/2010 - 03:00 | 362398 Droops
Droops's picture

OK this is honestly an embarrassingly sensationalist article. $385mio across 227 contracts? That's an average contract size of under $2mio a ticket. These sizes are miniscule, as is the entire size of the Sovereign CDS market. You are barking up a non-existent tree. Lex got it right at http://www.ft.com/cms/s/3/01713136-6323-11df-99a5-00144feab49a.html - the Sovereign CDS market is a total and utter red herring.

Thu, 05/20/2010 - 03:46 | 362418 Albatross
Albatross's picture

The biggest # of contract markets are the ones

one needs to pay attention to, imo..

Brasil(237), UK (227), Russia (120), Spain (219),

Greece (212), Turkey (128).

There is always plenty of action in Turkish CDS contracts interestingly..

Thu, 05/20/2010 - 04:44 | 362441 youngandhealthy
youngandhealthy's picture

Spain just sold €3,5Bn (upper level) of 10Yr Bonds. Bid cover 2x. Interest rate 4,04%....a "whole" +19Bp since last auction 2 months ago.

What crises!?

Thu, 05/20/2010 - 09:41 | 362843 Lux Fiat
Lux Fiat's picture

The 10 yr appeared to go swimmingly.  However, Tuesday's auction didn't, and came close to failure.  Spain is not out of the woods yet.  No one is.  http://www.ft.com/cms/s/0/4e325a90-62dd-11df-b1d1-00144feab49a.html

Thu, 05/20/2010 - 05:41 | 362465 Black Swan
Black Swan's picture

This message is for TYLER !!

May I please ask what organization can I approach in order to purchase the charts you showed above ?

Thanks

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