April 17 (Reuters) - JPMorgan Chase, Barclays and other Wall Street banks have started trading credit default swaps against flagship private credit funds run by Blackstone, Apollo Global and Ares
Wall Street banks trade derivatives to bet on private credit stress, FT reports
Wall Street Banks Enter Private Credit Derivatives Market
Major Banks Initiate Trading of Credit Default Swaps
April 17 (Reuters) - JPMorgan Chase, Barclays and other Wall Street banks have started trading credit default swaps linked to flagship private credit funds run by Blackstone, Apollo Global and Ares Management, the Financial Times reported on Friday.
Banks including Morgan Stanley and Citigroup were offering to trade contracts on the three funds, the FT report said, citing people familiar with the matter.
Verification and Responses from Involved Parties
Reuters could not independently verify the report. JPMorgan and Barclays declined to comment, while Morgan Stanley, Citigroup, Blackstone, Apollo Global and Ares did not immediately respond to Reuters' requests for comment.
Understanding Credit Default Swaps and Market Context
What Are Credit Default Swaps?
Credit default swaps (CDS) are derivatives that act as insurance against the risk that a bond issuer - such as a company, bank or government - fails to repay its debt.
Private Credit Sector Faces Stress Test
Private credit funds are facing their most serious stress test since the sector's rapid expansion following the 2008 financial crisis.
Recent Developments in Credit Default Swap Indexes
The news comes as S&P Dow Jones Indexes launched another credit-default swap index linked to the private credit market last week, giving investors a tool to bet against a sector that has faced turbulence in the last few months.
Reporting and Editorial Credits
(Reporting by Chandni Shah in Bengaluru; Editing by Mrigank Dhaniwala, Sherry Jacob-Phillips and Ronojoy Mazumdar)
