The old CDS crisis may have a new name

by OddFellow1066

Sounds to me like Credit Default Swaps (CDS) and “portfolio insurance” are back.

From the Wall Street Journal (7 November 2023)

Banks are unloading credit risk on private equity funds with devices called “synthetic risk transfer” notes. By such de-risking, the banks avoid higher capital charges as would be required under Basel II agreements.

Buyers of these swaps mentioned are: Ares Management and Magnetar Capital, Blackstone’s hedge-fund unit and D.E. Shaw

Here’s the link (paywalled):

www.wsj.com/finance/banking/bank-synthetic-risk-transfers-basel-endgame-62410f6c?siteid=yhoof2