Bail-in priced in?

Pic© JLogan

Category: Derivatives

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European bank CDS put to the test

Mounting concerns over Deutsche Bank's financial health, along with bail-in speculation have coincided with significant widening in the bank's CDS - both at a senior and subordinated level. However, whether financial CDS prices are reflective of bail-in risk is debatable - as is investor confidence that CDS contracts will act 'as hoped', should a bail-in occur at a European bank.

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