CVA, debt raising said to drive SoftBank CDS trading

Volumes rise as tech giant’s debt spree forces banks to hedge their counterparty exposure

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A change in how Japanese banks account for derivatives counterparty risk explains the runaway growth in credit default swap volumes on tech giant SoftBank, traders say. High levels of foreign currency debt issuance by SoftBank are also said to be a factor in the CDS activity.

The notional amount of CDS on SoftBank cleared at Japan Securities Clearing Corp climbed threefold in 2018 against the previous year, to hit ¥150 billion ($1.4 billion). The figure has continued to increase this year,