CDS Market Heightens Profile

By Christopher Faille, Reporter
Wednesday, June 01, 2005 12:25:42 PM ET

NEW YORK (HedgeWorld.com)

Janet Tavakoli, of Tavakoli Structured Finance, Chicago, said that the BIS figures confirm how uncertain statistics in the area are. After all, she noted, the British Banker's Association estimates the notional outstanding value of these swaps at a considerably lower figure than the BIS now has—the BBA puts the notional value of the global CDS market at US$4.8 trillion at the end of 2004, and projects a figure of US$8.2 trillion by 2006.

Ms. Tavakoli's firm estimates outstanding credit derivatives contracts will reach [$17.3 trillion] by the end of 2005 and [$26 trillion] at the end of 2006. Further, Ms. Tavakoli has suggested that the buyers of protection should be concerned about the ability of its sellers, including the hedge funds among them, to make good in the event of a series of credit defaults.

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