The price was right

Credit derivatives

Credit derivatives have been getting a bad name ever since the crisis kicked off for real in August 2007. As a result, all eyes were on the market during the second week of October, when auctions were held to work out the recovery values for bonds issued by Fannie Mae, Freddie Mac and Lehman Brothers - and therefore the amount an estimated $850 billion in outstanding credit default swaps (CDSs) would pay out.

Speaking before the October 6 auction for the two mortgage giants, Athanassios Diplas,