A huge market, Banks, hedge funds and investors to trade debt defaults insurance vibration on Thursday, cause the concerns of the new strain in the global financial system.
In this week of an agreement to stop the financial crisis of the euro area widely, the owner of Greek government bonds default swap don't expect to get any payment, even if a preliminary agreement between financial institutions and the European policy makers would recognize just half the book value of some Greek debt.
The decision not trigger exchange questions-like the value of insurance contract, and reveals the limitations of hedging strategies, Banks and investors to rely on. Exchange and widely used in each big bank bond holders and defuse a wide range of risks, traders bet on market trends. If exchange pay out when no debt default, Banks and fund to buy the insurance may face loss they thought they hedged.
The heart of a transaction security of an important 12 billion euros ($17 billion) to get rid of the outside of the aid it is urgent Greece default.
Comments, reflects the progress of late, they are continuously in negotiations for weeks, aims to calm anxiety of financial markets. But so far, deepen the problem is the lack of strong transfer to stop the United States. At least for the time being, investors seem to believe that enough shock absorber has built comfortable withstand any breach of contract or other highly debt-ridden the Greek state.
American interest rates are still lower than the 10-year us Treasury of 3%. By contrast, the Spanish bond yields to an 11-year high of 5.74% of the situation is worry investors worry about it may be the next target in Greece.
"The U.S. financial institutions very cash-rich, so this means that a liquidity crisis would be extraordinary influence before they said," LeBas, total fixed income Janney Montgomery Scott strategist
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