Lack of sellers could hold back Chinese CDS market

Demand for credit protection increases, but traders say sellers will be hard to find

peoples-bank-of-china-new
People's Bank of China said to be discussing new credit instruments

Attempts to launch a credit default swap (CDS) market in China could be dashed by a lack of protection sellers, market participants fear.

A Chinese version of CDS, called credit risk mitigation (CRM), has been around since 2010 but can only be used to hedge a specific bond, rather than the issuer. With credit defaults rising and certain foreign investors now able to access the onshore interbank bond market, regulators are said to be in talks with a group of Chinese banks to develop a CDS market

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