CDS

Reader Mike points out an interesting potential selling opportunity in AIG 1 Yr CDS, which is trading on one of the most inverted curves in CDS land. As a collapse of AIG would be equivalent to the blasphemous "credit event" of U.S. Sovereign CDS, having to pay for the settlement on 1 years in AIG seems like an oddly armageddonesque prospect.

Reader Mike points out an interesting potential selling opportunity in AIG 1 Yr CDS, which is trading on one of the most inverted curves in CDS land. As a collapse of AIG would be equivalent to the blasphemous "credit event" of U.S. Sovereign CDS, having to pay for the settlement on 1 years in AIG seems like an oddly armageddonesque prospect.

The Federal Reserve Board has approved the proposal of Atlanta-based Intercontinental Exchange (ICE) to be CDS clearinghouse. The SEC is expected to follow promptly in its approval as well. As counterparty risk is thus set to be eliminated, CDS spreads will likely widen dramatically and the CDS basis trade will collapse over the next few months as CDS and bond spread converge.

First General Electric, now BRK. Berkshire Hathaway CDS not helping market today... The implied risk of Warren Buffett's derivatives bet and his 2008 losses have pushed BRK 5 year CDS to an all time wide today, offered at 540bps after closing at 510 yesterday. Indicatively the IG11 index of investment grade names is currently at 244bps, implying the market views BRK's AAA rating a little more like BB (or the investment grade universe is massively mispriced).

The increasing risk of everything imploding into the financial singularity known as AIG has caused not only sovereign risk to blow out to never before seen risk levels, but also that of cities and states. New York City 5 year CDS was last seen trading at 335/355, implying (per the JPM recently oursourced black box model) a 50% chance of default in 5 years (granted assuming 80% recovery which may be a stretch).

The increasing risk of everything imploding into the financial singularity known as AIG has caused not only sovereign risk to blow out to never before seen risk levels, but also that of cities and states. New York City 5 year CDS was last seen trading at 335/355, implying (per the JPM recently oursourced black box model) a 50% chance of default in 5 years (granted assuming 80% recovery which may be a stretch).

The troubled company, after posting ghastly numbers on Friday, just announced it is commencing a $350 million debt offering, which will be "issued at a discount to the face amount." The maker of Oriented Strand Board, or the 99 cent store plywood equivalent, is burning cash at an accelerating rate and with new housing starts at record lows, needs to replenish its dwindling cash reserves or become the latest addition to o

Most bank names wider by 20-30 bps. Notable movers Bank of Communist America: +30 to 270; Citi: +35 to 430; Merrill: +30 to 375

In a historic event that went largely unnoticed, last night ISDA disclosed it is open sourcing JP Morgan's legendary CDS Standard Model which it got ownerships of on January 29, thereby issuing a challenge to the global community of financial white hats to decompile the code and figure out just what the voodoo is the wizards in JP Morgan's Quantitative Research group have put

In a historic event that went largely unnoticed, last night ISDA disclosed it is open sourcing JP Morgan's legendary CDS Standard Model which it got ownerships of on January 29, thereby issuing a challenge to the global community of financial white hats to decompile the code and figure out just what the voodoo is the wizards in JP Morgan's Quantitative Research group have p

But, but...this was all contained the last time the company lied about its current state... Looks like US Taxpayer Capital LLC will need some CDS salespeople/traders as it is the unwitting recipient of a $300 billion CDS book.

Feb. 26 (Bloomberg) -- American International Group Inc. may get a backstop from the U.S. to protect against further losses on credit-default swaps, according to a person familiar with the matter.

Cars and financials not happy

Cars and financials not happy

US CDS mid passes 100 basis points (full market 95/105)... obviously historic event. Some traders call this the doomsday count up as the higher it goes the dumber you have to be to buy it (as you will never collect on any insurance), and the likelier it is that the end of the world is nigh. If this had to be quanitified in terms of colors, the equivalent would be a deep shade of burgundy.