CIT auction not likely to be heavily bid
Auctions to cash-settle credit default swaps (CDS) on New York-based commercial lender CIT might not be heavily bid, despite its popularity as a constituent of synthetic collateralised debt obligation (CDO) portfolios, say analysts.
When firms are widely included in synthetic CDOs, bank correlation desks often try to level their short CDS positions by buying the underlying bonds. "Generally, when you have a credit that is referenced in a synthetic CDO and there aren't that many bonds outstanding
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