Scotland secession unlikely to split UK CDSs, analysts say

No ambiguity in 2014 contracts, but questions exist over 2003 vintage

Scottish Parliament at Holyrood
The Scottish Parliament building

Holders of credit default swap (CDS) protection on the UK have a slim chance of getting something for nothing this September, when Scotland holds a referendum on independence. If voters decide to go it alone, credit strategists say it would probably be deemed a CDS succession event – which could see outstanding contracts split in two, giving market participants additional protection on what would probably be a riskier credit. Uncertainty around the outcome could also drive spreads wider