Investors regroup as swaps panic hits
Paul J Davies, Gillian Tett, LondonNovember 07, 2006
INVESTMENT banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of "panic selling" reported in the US and European credit derivatives market last week.
This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels - signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on.
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posted by G @ 2:37 PM
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