CDS buyers should beware of de-mergers, warns Fitch

Investors in credit default swaps (CDS) could find their holdings unexpectedly affected by corporate spin-offs and de-mergers, Fitch Ratings has warned.

In a report published last month, written by Fitch analysts Roger Merritt, James Batterman and Tim Greening, the ratings agency says the CDS market is not a perfect substitute for the loan and bond markets.

In particular, in the event of a spin-off, loan and bondholders could find themselves benefiting from early retirement or protection agree

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