The past week was virtually dead in CDS trading, with a mere $14.6 billion in notional changing hands, however consisting of surprisingly robust 18,776 contracts. The prior week derisking in sovereigns reversed, and last week saw a $24 billion derisking in the space. All other sectors were significantly unchanged, with the exception of consumer services where $11.2 billion in protection was unwound.
Gross outstandings week over week were unchanged at $28 trillion, consisting of $15.2 trillion in single-names and $12.8 trillion in index and index tranches, both metrics unchanged from a week ago.
In the top 20 single name category, some notable inversions were present: the Republic of Italy which in April 3 week saw over half a trillion in CDS purchases saw almost the entire amount unwound, with $496 billion in CDS rerisking. Among other notable flippers were Ford Motor Co., Volkswagen, Nordstrom, Macy's and the Republic of Ireland, while on the rerisking side the top names were Turkey, Greece, KB Home, UPM and IP, which the week before was in the top 10 deriskers and likely merits a closer look for purely fundamental reasons.
To new readers, we would refer to this data as a guidepost of technical shifts in highly liquid credit names, which could be used as a leading indicator of potential equity moves in the underlying names (for one reason or another).
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