Economic Research | Country Risk Weekly Bulletin | Country Risk Weekly Bulletin 577 | Trading in emerging markets' Credit Default Swaps up 40% to $1.82 trillion in 2018 | Lebanon | Byblos Bank

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Byblos Bank

Country Risk Weekly Bulletin 577

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Trading in emerging markets' Credit Default Swaps up 40% to $1.82 trillion in 2018

Trading in emerging markets' Credit Default Swaps (CDS) reached $357bn in the fourth quarter of 2018, constituting a drop of 30% from $509bn in the third quarter of 2018 and a rise of 30% from $275bn in the fourth quarter of 2017. Trading reached $488bn in the first quarter and $468bn in the second quarter of the year. The most frequently traded sovereign CDS contracts in the fourth quarter of 2018 were those of Mexico and Brazil at $34bn each, followed by Turkey at $25bn, which significantly dropped from $73bn in the third quarter of 2018. As such, traded sovereign CDS contracts on Mexico and Brazil accounted each for about 9.5% of total trading in emerging market CDS in the covered quarter, followed by CDS contracts on Turkey (7%). The most frequently traded corporate CDS contracts in the fourth quarter of 2018 were those of Mexico's state-oil company Pemex at $1.8bn, which accounted for 0.5% of total trading in emerging markets CDS. Overall, CDS trading totaled $1,822bn in 2018, constituting an increase of 40% from $1,298bn in 2017, as investors speculated on Turkey and Argentina's economic conditions, as well as on elections in countries such as Brazil and Mexico. The survey covered data on CDS contracts for 21 emerging economies and nine emerging market corporate issuers.
Source: EMTA
 
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