Economics
Goldman Has a New Way for You to Bet on the Next Banking Crisis
- Derivatives provide hedge or exposure to high-yield AT1 notes
- Other market makers to start publishing tradeable prices soon
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE)
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
Less than a decade after the last major banking crisis, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are offering investors a new way to bet on the next one.
The two financial giants are now making markets in derivatives that allow investors to bet on or against high-risk bank bonds that financial regulators can wipe out if a lender runs into trouble. Others are also planning to start trading the contracts, known as total-return swaps, in the coming weeks, according to Max Ruscher, the London-based director of credit indexes at IHS Markit Ltd., which administers the benchmarks that the swaps are linked to.