The details of a shotgun marriage between UBS and Credit Suisse arranged by Swiss regulators have been leaking out. Credit Suisse has been plagued by problems, and one might hope that this act would finally clear them up. The concern I am seeing at the time of writing is the risk of contagion.
One toxic black box buys out another toxic black box while everyone gets to pretend they're still solvent because nobody has wiped out their equity. UBS 5-yr CDS seem to have blown out by 40 bps (not surprisingly). I guess this unholy entity will at least get to cancel out some derivative positions.
One toxic black box buys out another toxic black box while everyone gets to pretend they're still solvent because nobody has wiped out their equity. UBS 5-yr CDS seem to have blown out by 40 bps (not surprisingly). I guess this unholy entity will at least get to cancel out some derivative positions.