Debt Risk Shifting to Investors as Bank Regulations Bite

Vilified for worsening the financial crisis, the credit derivatives market is undergoing a structural shift as money managers take on risk shunned by banks after regulators forced lenders to shrink their dealings.

Investors now account for more than 25 percent of the $19.9 trillion market, up from 20 percent a year ago, according to the Depository Trust & Clearing Corp. They issued a net $132 billion of contracts insuring against losses on bonds as of June 6, the data show. This time last year they were net buyers of $15 billion of insurance.