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M$1.00  Funded By Mahalo ? |  April 30, 2009 02:26 PM

How will credit default swaps market be affected by the Chrysler Chapter 11 filing?

There are incentives to push companies in bankruptcy. CDS are leading investors to become indifferent to push for bankruptcy. Why bother if the market will give you a price? Ownership of a CDS will guarantee the investor a payout rather than negotiate and keep the company out of bankruptcy.

http://www.nakedcapitalism.com/2009/04/musings-on-credit-default-swaps.html
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May 26, 2009 08:40 AM
Good question. But remember that those markets stand at the brink of re-regulation, so the danger looms above them. Your question can really be address at any parallel/high risk market right now - will they be the same a year from now, and will those types of products remain essentially the same, in value and in substance? I think that's the real question those investor should be thinking about.


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May 26, 2009 01:33 PM
Some GM bondholders will advocate for Chapter 11, forcing the CDS payout, being the difference in the liquidated bond price and the insured difference.

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May 26, 2009 09:42 PM
explain re-regulation and its implications.

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