CDS

JP Morgan Chase is to restate its Q1 results downwards by a net $459m after it revealed the losses it has sustained from its ‘London Whale' positions have widened to $4.4bn.

Fixed income managers using credit default swaps as hedges are exposing themselves to 'very dangerous positions' due to price dislocation between the derivatives and the underlying market, said Kames Capital's Stephen Snowden.

Strategic bond managers are upping their use of derivatives as liquidity issues, dislocated pricing structures and cheaper trading opportunities transform how they manage their portfolios.

Kames Capital's David Roberts has added "disaster insurance" to the £510m Strategic Bond fund on doubts the markets will be able to function smoothly over the summer.

So, Greece has been saved - is that right? According to ISDA (the International Swaps and Derivatives Association) a "Restructuring Credit Event has occurred with respect to the Hellenic Republic" which in the vernacular means the Greeks are bust - tell...

A credit event in Greece triggering CDS protection payouts would be positive for peripheral bonds, according to Argonaut's Barry Norris, as investors are more likely to buy them with the comfort of insurance.

PIMCO's Bill Gross has criticised the decision that Greece's debt restructuring should not spark a payout on credit default swaps.

THE BIG QUESTION

The past three years have been a tumultuous time for the financials sector, which has seen a phase of deleveraging, rights issues and balance sheet repair which continues to this day.

BONDS