Shorting Junk Loans Just Got Easier as New Derivatives Unveiled
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Wall Street has turned to financial engineering to solve one of junk-debt investors’ biggest problems: They can’t make wagers quickly enough in these illiquid markets where trades are completed over the phone.
Banks are again resorting to derivatives to make it easier to place bullish and bearish bets amid a credit boom, allowing traders to amplify their profits or losses on debt rated below investment grade.