China Default-Swap Bets at 14-Month High on Trust Flops
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Credit traders took out the most protection on China’s debt in 14 months just as the world’s second-biggest economy faces default tests in its $1.7 trillion market for trust products.
The net notional amount of credit-default swaps outstanding on Chinese sovereign bonds totaled $9.125 billion on Jan. 17, the most since November 2012, according to weekly figures published by Depository Trust & Clearing Corp. December’s 12 percent jump to $9.066 billion was the biggest monthly gain since October 2011, the figures indicate. The cost of the contracts surged 25 basis points since Dec. 31, poised for the largest monthly increase since a record cash crunch in June.