FourSixThree and Diameter bet on Credit Suisse CDS payout

Related Topics

Hedge funds including FourSixThree Capital and Diameter Capital have been buying swaps insuring Credit Suisse's subordinated bonds believing that the controversial decision to write down the bank's AT1 securities as part of its takeover by rival UBS could trigger a payout of the derivatives contracts, according to a report by Bloomberg.

According to CMAI prices, the five-year credit default swaps dipped on Thursday, but remain up more than 80 basis points this week to about 360 – the biggest increase since UBS Group AG agreed to buy Credit Suisse in an emergency deal in March. 

The report cites unnamed sources as revealing that law firm Kramer Levin is helping to make a case for an insurance payout on the write-down of about $17 billion of Credit Suisse's Additional Tier 1 notes.

Author Profile