Article

2022-03-18 Europe

Someone (Soros?) just made a killing: Russia makes $117m bond payment, credit default swaps spread shrinks by almost half

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Posted by Omomort Whomoger7350 2022-03-18 02:14|| || Front Page|| [3 views ] Top

#1 I don't understand. Can some kind soul explain?

Posted by Dron66046 2022-03-18 02:34|| 2022-03-18 02:34|| Front Page Top

#2 Damn. Who's buying these credit default swaps? Kolomoisky?

Posted by Flaing Flerelet3622 2022-03-18 02:35|| 2022-03-18 02:35|| Front Page Top

#3 Oh I get it, sort of... maybe. It's like buying someone's liability, eh?

Posted by Dron66046 2022-03-18 02:40|| 2022-03-18 02:40|| Front Page Top

#4 "I don't understand. Can some kind soul explain?"

1. Impose sanctions, create war hysteria and use media shills to tell the world Russia's about to fall off a cliff. Watch the credit default spread (=perceived risk of default) soar.

2. Verify that Russia has plenty of cash to meet its debt obligations and fund the war.

3. Confirm with Indian and Chinese sources that they will create rupee-ruble and yuan-ruble payment mechanisms to make sure sanctions don't kill or cripple Russia.

4. Buy Russian credit default swaps after they've fallen.

5. Watch Russia meet its interest payments, causing credit default swaps to soar.

6. Sell credit default swaps and pocket hundreds of millions.

from "The War Profiteer's Guide to Arbitrage For Fun and Profit," Soros Publications, 2002

Posted by Gleresh Ghibelline5214 2022-03-18 02:46|| 2022-03-18 02:46|| Front Page Top

#5 High spread = high default risk = swaps are cheap
Low spread = low default risk = swaps are dear
Buy low, sell high
Stoke the war, pocket a fortune

Posted by Gleresh Ghibelline5214 2022-03-18 02:48|| 2022-03-18 02:48|| Front Page Top

#6 Hmmm... thanks, Gleresh.

[nods like everything computes fine]

Posted by Dron66046 2022-03-18 02:56|| 2022-03-18 02:56|| Front Page Top

#7 Other way round. Buyer expects default, seller dies not expect default and collects "insurance" premium

Posted by Sheba Slomort2142 2022-03-18 03:23|| 2022-03-18 03:23|| Front Page Top

#8 ^ The seller dies?! Man, I knew it was a hostile market bu... oh! Seller does not expect defaults.

WHew!

[Runs off to download The Big Short, one more lesson in a yet unfinished education]

Posted by Dron66046 2022-03-18 03:30|| 2022-03-18 03:30|| Front Page Top

#9 The Russian CDS price is the default risk and it fell overnight from 14000 to 6000 basis points. That means a once in a lifetime profit for someone, probably the Koch Brothers trading arm. The Kochs are still doing business with Russia

Posted by Uleamble Sproing1093 2022-03-18 09:29|| 2022-03-18 09:29|| Front Page Top

#10 I'd bet on Soros (tho agree the Kichs probably made a bundle as well). Soros specializes in arbitraging the state. Plus he's got the best inside information

Posted by Clineth Clinens7975 2022-03-18 09:43|| 2022-03-18 09:43|| Front Page Top

#11 Arbitrage used to be an easy manual market ploy, but electronic trading and near instantaneous spreads have made it impossible for anyone but institutions to employ. But, if you can move entire world news reporting and build massive expectations on either side of the financial instrument being traded, and you can avoid the regulatory oversight enforcement, then you can make obscene profits. Soros and the Kremlin seems likely winners. A lot of lesser players got ruined is my guess.

Posted by NoMoreBS 2022-03-18 11:58|| 2022-03-18 11:58|| Front Page Top

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