CDS buyers should beware demergers, warns Fitch

Investors in credit default swaps could find their holdings unexpectedly affected by corporate spin-offs and demergers, rating agency Fitch has warned.

In a report published this week, Fitch analysts Roger Merritt, James Batterman and Tim Greening warn that 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 agreements. CDS, however, would

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