Derivs - Credit

Leveraged loan and high yield bond documentation is starting to see a new feature creep in — anti “net short” language, which attempts to stop creditors that are short the company from getting a place at the table in a restructuring. The funds targeted by the new provisions aren’t exactly the cuddliest citizens of the capital markets, but they won’t be the only casualties.

Language to prevent ‘net short’ debt activist investors manipulating distressed corporates to benefit CDS positions could prove ineffective in bond documentation, shutting down the changes almost as soon as they have been introduced in the market.

Members of the US House Committee on Agriculture reserved harsh words for a chief European regulator on Wednesday, in a sign that the cross-border spat over derivatives clearing has not yet subsided.

The auction to determine the credit default swap payouts over the safeguard proceedings of Rallye was held on Thursday, and gave protection buyers an 87.5% payout. The supermarket holding company’s bonds had slid roughly five points in the week before, to trade at around 15 ahead of the auction, but settlement interest was all on one side, pushing the final price to 12.5.

Another senior member of the US Commodity Futures Trading Commission has left the regulator, as its director of the division of Swap Dealer & Intermediary Oversight (DSIO), Matthew Kulkin, stepped down on Wednesday.

The US Commodity Futures Trading Commission and the UK’s Financial Conduct Authority have added regulatory pressure to the credit default swap market, pledging to clamp down on manufactured credit events.

The European Securities and Markets Authority is asking market participants if certain factors — such as fair value accounting, remuneration of investors and credit default swaps — exacerbate short-term pressures on companies, as part of its work on sustainable finance.

Eric Pan, director of the US Commodity Futures Trading Commission’s Office of International Affairs (OIA), is to stand down after nearly four years.

After extensive restructuring, interdealer broker Tradition is marketing a modular data product under its market data and information services division, TraditionDATA.

The Basel committee on banking supervision has agreed to allow banks to offset the margin posted by clients in calculating the leverage ratio, marking a hard fought victory for the clearing industry.

GlobalCapital is pleased to announce the nominees for this year’s Global Derivatives Awards.

KPMG UK has named Kay Swinburne, a central figure in the shaping of the second Markets in Financial Instruments Directive, as its vice-chair of financial services. Her role will be to help shape the firm’s insights on risk and regulation.