•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

From The Opalesque Team: A Wall Street Journal article this week revealed how jittery the large firms which hedge funds use as counterparties have become towards what used to be some of their most valuable clients. However, the rising CDR Counterparty Risk Index (CRI), which hit a three month high on Wednesday, showed that the wariness cuts both ways.

“Counterparty risk rose to its highest level in over three months today as the weakness evident in financial equities drifted further up the capital structure,” Tim Backshall, Chief Strategist at Credit Derivatives Research LLC which publishes the index said in a statement.

The CRI, which averages credit default swap spreads of the largest credit derivative dealers, reached 207, trading higher (reflecting more risk) than it did during the Bear Stearns meltdown in March 2008, when it peaked at 204.

Prime brokers retrenching The largest banks have reportedly cut back on financing and other services to hedge funds, cutting some of the largest hedge funds from “A-list” services due to poor performance and diminished assets. “Now prime brokers are in retrenchment as their parent banks reel from losses and take care not to take undue risk in lending out their cash,” said the Wall Street Journal (Source).

While the CRI is at the highest it has been in three months, it is......................

To view our full article Click here