Bank Of America CDS Now Offered At All Time Wides: Full Fin CDS Rerack

Tyler Durden's picture

And while stocks continue to blissfully exist in some parallel universe, the rout in financials has just entered overdrive, of particular note Bank of America, which has just passed it all time wides on the offered side. When the mid-market is north of 400, probably in about 2-3 hours, it may be time to cue the Lento from Chopin Piano Sonata, No. 2 in B-flat minor, Op. 35.

                   ~BANKS~         CHG                         
                  BAC   375/405   |+10|                       
                  Citi  240/260     |+10|                       
                  JPM   135/145   |+8  |                       
                  WFC   138/148  |+10|                       
                   ~BROKERS~       CHG                         
                  GS    268/278   |+8  |                       
                  MER   420/450  |+10|                       
                  MS    315/335   |+5  |  

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slaughterer's picture

Looks like another 2008-style fire sale scheduled for the NYFED this weekend. 

fx's picture

The only ones making money on these absurd instruments called "CDS" are and will be the writers thereof - at least when it comes to CDS on the biggest and systemically important banks. Lehman failed, yes, and it exactly showed the governments and central banks what a hurricane followed/accompanied it. The powers that be will not let any of those banks go bk. Shareholders may get wiped out, even senior bondholders may receive some blows but rest assured cds holders will get nothing. Did you notice Greece? selective default, large rescue funds - no credit event. Heck, BAC and Co could make a ton of money by just selling each others' CDS  - billions of $$. Anybody buying these CDS is a complete fool, imho.

Oh and btw: the notion that the CBs are out of money compared to 2008 is a naive one, imho. They could print up as much money and temporary credit facilities as needed. They could grant unlimited liquidity and funding for years to come. Of course they are already leveraged to the hilt. So what? they could leverage up  many times more. The Fed, the ECB, the Boj or the PBoC certainly will never ever get a margin call, so the only real constraints are public opinion and potentially inflationary effects down the road. they will rather deal with those issues later than allow a banking melt-down. All those fears and panic moves in the CDS markets are overblown. 2 years from now the same people who right now rush into bank-CDS will be happy to sell them for a fraction of todays prices. watch and learn.

ZeroPower's picture

Inverted CDS curve for BAC... 5yr "costs" more than the 10yr upfront.

We saw this in Greece as well.

Christobevii3's picture

Can we just refer to this as the prolapse curve?

EscapeKey's picture

As long as they don't pledge BAC shares as collateral for CDS written on BAC, I think we'll be alright.

hugovanderbubble's picture


BAC and Unicredito

Worst CDS across all boards of big banks....


ZeroPower's picture

? I sure hope youre not trading based on your facts.

Santander, Intesa, RBS, basically all Portguese baks.. all wider. Sub or SNR, take your pick.

hugovanderbubble's picture

Look the CDS 2 yrs...the five year is irrelevant for a credit event. The 2yrs is the real key one to focus.




banks with > 10 mn euros market cap  worst 2 yrs cds.



ZeroPower's picture

5yr is irrelevant for a credit event? Lol

Lets see, the most recent 5yr CDS is the most liquid and most relevant for any sort of comparisons to be made. Second, due to the roll, any desk which hedges their book (so, all MMs in CDS) will choose the 5yr for the very reason every other desk who needs to hedge, uses the 5yr. If you want to look at a diff maturity, look at the 10yr. But of course i assume you know duration risk is a lot more prevalent..

As for the constraints, thats fine, werent there in your earlier post.

prophet's picture

you really ought to post an article every couple of weeks

hugovanderbubble's picture


Here are the facts..


The last update on CDS2yr in EUropean banks and US banks...





BetTheHouse's picture

Funeral march, bitchez!

Popo's picture

And... SKF is in the shitter...

zorba THE GREEK's picture

Somebody better send out the BAIL signal for BENMAN.

sudzee's picture

Ready, get set, PRINT.

maxmad's picture

No QE3, bitchez!

Scisco's picture

it may be time to cue the Lento from Chopin Piano Sonata, No. 2 in B-flat minor, Op. 35.


I LOLed. Thanks TD.

I feel like a masochist reading these headlines and laughing.

goldinpenguin's picture

Funny, I youtubed it

Periodic updates on the fin cds would be entertaining.


Is there any "drop dead" price for any of these CDS? The Merrill CDS is worse than BAC - if that is any consolation. Jefferies analyst said BAC needs to raise 40-50B capital

John McCloy's picture

Tyler how dare you not pit GS in the bank category. Don't you have a Goldman branch in your area like me?
Ben said they are a bank so that's good enough for me.

AngryGerman's picture

why not introduce worldbonds? let the germans also pay for everybody else?

magpie's picture

Recently i was discussing how a supermarket offers a "Euro-Wine" mixed from the finest Wines of Europe.

Sounds like a great idea.

prophet's picture

G-20.  BINGO.  $11T of global bonds to sop up the imbalances (and restructure the debts).

Scisco's picture

Didn't they come to the conculsion that credit/debt needed to increase by 200 trillion next year? Global bonds sounds like a great way to do it.

disabledvet's picture

I've actually got the imside skinny on some martian bonds about to be released. Apparently they're back by all the mineral wealth on the entore planet. Maturity is a liitle long--says here a thousand years--so there is some duration risk. 4 and a quarter with "globaltax free status" tho. Obviously mars isn't going anywhere anytime soon...

Seasmoke's picture

Brian Moynihan is going to wish he diversified his net worth

The Shootist's picture

Go big or go home banksters.

j0nx's picture

Please. Whatever this joker said he did, he did the opposite. That bullshit was just said to fluff the sheep into believing all was well. Typical Baghdad Bob bullshit that we all heard leading up to the Subprime implosion and the 2008 financial calamity. Wouldn't surprise me if he shorted their stock secretly somehow on the back end.

prophet's picture

without an american bank in crisis it is so much harder to justify let alone hide the american participation in the european trap (troubled relief asset purchase)

free MER

ZeroPower's picture

UBS is the biggest 'winner' on the day, 193/206... +24!

sudzee's picture

Not to worry, the FDIC will cut you a post dated cheque. They've got lots of bucks coming in soon.

Surly Bear's picture

I have a staunch cup of joe, a banana, and a sandwich for lunch. Forty-five minutes to the bell…let’s start the show!

Village Smithy's picture

Help me out here, which Bugs Bunny episode is that particular piece from again? 

Another Texan's picture

I never thought shorting a company would make me so happy.  Everytime i drive by the local BAC branch, i just smile to myself.



Archimedes's picture

Bank of America is currently trading at 1/3 of it's book value! Yet no Hedge fund, Blackrock, Paulson, Tepper, Buffet want to buy a company at a third of it's price? Where  are all the bulls to Buy!Buy!Buy?

This means everyone knows that The bank is not worth what it says it is and it is going down. Oh, and in other news That old hypocrite Warren Buffet has lost nearly 2 Billion on his BYD investment! Ha!Ha!



slaughterer's picture

BAC common fair value is $2.  Everybody knows this by now. 

Hedge Hunter's picture

BAC shareholders are about to take a bite of a big shit sandwich.



Gibu The Great's picture

Credit markets are obviously reflecting where we are headed in the coming days/weeks.  Stocks are still running on hopium ahead of Friday.

Just watch BAC go from +2% to -2% in premarket in the span of a few minutes.  Euro indicies are well coming well off their highs and futures are cooling.  Same with the (light) selling in gold.  Looks like we're setting up for yet another interesting day at the casino. 

BetTheHouse's picture

The market is oblivious.  Merrily ticking higher.  It's going to be a rude awakening at some point. 

Gibu The Great's picture

It's hopped up on hopium anticipating some sort of QE from Big Daddy Ben on Friday.  But it is likely that will not come.  Perhaps then the market will wake up and find that that "falling in my sleep" feeling is real, and there's a long way yet to go.

myztix's picture

what causes the CDS to go in a huge crazy death roll like that?

Is it losing value just like that or is it pure speculation that BAC is going to fail.

It's been talked that 400+ CDS is bad and marks the march 2009 lows.

What exactly is the CDS.. trying to gain some knowledge here.

bill1102inf's picture

CDS is Credit Default Swap, it is INSURANCE against default, you buy CDS when you think an entity is going to default, the more expensive it is the higher the risk.  See - Bank Of Scamerica is INSOLVENT - has been for YEARS!! Thats why anyone can buy it for 1/3 what its 'value' is, YET NO ONE will touch it. Thats because it is bankrupt 6X over, literally.  This from a company that has 29.9% Credit Cards, borrows at 0% from the fed, off shores employees (India), and took BILLIONS in bailout $$$.  And oh, they paid their execs bonuses... BIG BONUSES

Financial_Guardian_Angel's picture

Brilliant and perfect explanation. I would add they are insolvent because the mortgage loans they hold are double (or worse) than the value of the property. This is based on the "mark to myth" accounting rule that was allowed by the current administration.