DannyBoy29

Credit Default Swaps: Why I've Changed Sides

CDS' are a useful instrument but as long as you can trade them without holding the underlying debt I still think there are issues. What is to stop me from buying up say $1B in debt of company XYZ and then buying $2B in protectiong in the CDS market. I then do everything in my power to force the company into Ch 11 and collect the $2B in credit default swaps.