Distressed Wave Tests Traders Mettle in $10 Trillion Swap Market
- European CDS payouts more than double in 2019 to $1 billion
- Credit Suisse, Diameter among winners in CDS trades this year
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The rising tide of distressed companies in Europe is boosting the appeal of a much-criticized corner of the $10 trillion market for credit insurance.
Credit-default swaps -- derivatives that pay out when a company defaults on debt -- have brought at least $1 billion in windfalls to their holders in Europe this year, more than double the 2018 total, according to a Bloomberg analysis of settlement auctions. Credit Suisse Group AG and hedge funds Diameter Capital Partners and Sona Asset Management are among investors that made money by using CDS to bet against stressed firms this year.