The CDS curse

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Credit derivatives destroy companies, if you believe some of the recent criticism levelled at the market. Investors protected through credit default swaps (CDSs) will slam the door on distressed companies, propelling them into bankruptcy and collecting par on their bonds rather than accepting less in a restructuring. It is an argument that is getting plenty of airtime. In June, George Soros said CDSs are like having a licence to kill someone whose life insurance you stand to collect, and made re

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