UK Continues To Be A Top Sovereign CDS Derisker

After taking a brief break last week, the UK is once again firmly in the top sovereign deriskers: a place it has held with pride for almost two months now. Summing up cumulative net notional exposure on the UK based on just the last several weeks results in a net short exposure of well over $3 billion. Someone has now amassed a huge short on the British Isles. Curiously, the country that was actually the top derisker in the past week, with $420 million in net notional change, was Brazil, the same Brazil which today decided to not lift any offers in its 2021 Fixed Coupon Bond auction. Is this the next hotbed of instability? Look for at least one more week of aggressive derisking before confirming this trend. Turkey completes the trio of top deriskers, with $172 billion in CDS. Surely with the prior week ending on May 28, there is no way anyone could have hedged for an Israeli incursion of Turkish ships ahead of time. On the other end, some of the names that have been making the news recently, have seen some material rerisking, probably based on short positional unwinds: the top five were the US, Japan, Austria, France and China. After tonight's news out of Tokyo, look for Japan to take its rightful place at the top of this table.

Comments

[PhD]

Soon the whole G7 will be on the top of the pops.

Welcome bizzaro world!!

[Double down]

Brazil is interesting.  An omen?

[Trimmed Hedge]

United Mexican States -- that's the US, right?

¡Estados Unidos, muchachos!

[Al Huxley]

No, its Mexico.

[bob_dabolina]

Credit traders aren't that smart, they are just impatient. They want default and they WANT IT NOW!

I know for a fact a few of these are out of order.

Whatev...I guess we can have fun with it.

[Al Huxley]

Which are out of order?

[bob_dabolina]

Give me $100 and I'll tell you

[Al Huxley]

That's ok. I was just curious, I don't really need to know, I already know where the market's going.

[Trimmed Hedge]

Where?

[qussl3]

Hell in a handbasket

[EscapeKey]

DOW 36,000!

[Black Swan]

Hi Tyler

If i wanted to get my hands on this info in the form of the chart we see above. What organisation would I have to approach in order to purchase this.

Cheers

[Cerulean]

Try this one for a start:

http://www.isdacdsmarketplace.com/exposures_and_activity/top_10_cds_posi...

Although, like you, I would like to know the source of the above chart

[CorrelationTrader]

The Chart above is called MSExcel... but the data is on the DTCC website. It requires alittle cut and paste but its all there. GL

[Coldcall]

Having been very pessimistic about the UK, i think its actually one of the bright spots at the moment. However that assumption is based on the premise that UK banks wont have to take large writedowns on eurodebt.

UK borrowing has actually undershot estimates by about 5-10%.

Also they have devalued Sterling since last year, and sort of beat everyone else to weakening the currency so making foreign investment appear attractive. This has really stopped many Brits travelling or buying property on the continent in euros. Again a positive for UK Plc.

London is chock a block with tourists. Also Brits are a little more understanding of the cuts necessary than most european countries.

[sureseam]

Can I take issue with some of what Coldcall says ...

Having made £6bn of public cuts there is a general feel good "getting to grips" feeling. However I am told that the UK public debt is still rising by £3bn per week so making an impact will demand much more strident action.  

Taking more strident action will in turn put the coalition under severe strain and the markets won't enjoy the wobbles.

As a bright star the UK is undoubtedly ahead of the EU which is expanding its public spending by some 6% ..... concerning which words fail me (but thankfully not Daniel Hannan).

Another thing that is worrying is that the UK is propping up some banks (RBS and HBOS) which are major lenders in the UK commercial property sector (think big time negative equity and probable foreclosures). 

Cutting public spending in order to prop up hubristic banks doesn't go down well with the populace.  Having 4+ years before the next election is cold comfort if your coalition starts to crumble.

For the moment it feels good enough for Sterling to start rising so the markets roll...

[Coldcall]

 i wouldnt disagree with any of your points. And i completley agree on the fact that £6bn in savings is a drop in the ocean of whats needed.

[Black Swan]

Thanks for that Cerulean, appreciate it very much .

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