Tuesday, October 7, 2008
First CDS bullet dodged, But good luck with Lehman, on Friday
The CDS market yesterday dodged the first of three big bullets headed its way when, the auction of obligations related to the debt of Phoney and Fraudy produced recoveries. Yhe real fun starts Friday, when the Lehman deals get unwound. According to The Financial Times: "Banks are hoarding cash in expectation of pay-outs on up to $400bn of defaulted credit derivatives linked to Lehman Brothers and other institutions, according to analysts and dealers." Included nice video on how it all works.