Traders blame bail-in for Deutsche CDS jump

Debt subordination behind spread widening from January; CVA desks may need to adjust hedge ratios

Deutsche Bank
Germany's interpretation of bail-in rules could be partly to blame for CDS surge

The soaring cost of default protection on Deutsche Bank may not be all it seems. Recent weeks have seen the bank's share price collapse amid speculation it may struggle to raise the capital needed to cover a new settlement with US authorities, but traders believe an accompanying surge in Deutsche Bank's credit default swap (CDS) spread is at least partly a result of Germany's new bail-in rules – a conclusion that also has implications for how dealers measure and hedge exposure to the German bank

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: