CoCo Default Swaps Seen Fueling Bets Against Riskiest Bank Debt
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The creation of credit-default swaps insuring contingent capital securities may spur bets against the riskiest bank debt.
“CDS changes everything because it allows you to short CoCos in a very efficient way,” said Jochen Felsenheimer, the Munich-based founder of XAIA Investment GmbH, which operates three credit funds. “I’m looking forward to having an instrument like this.”