Credit Default Swaps & Where to Buy Them

Alicia Badilla By Alicia Badilla, 17th Nov 2011 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Investment

AUSTRALIAN Buyers ask: What are CDS? Read on to learn everything you need to know about investing in credit default swaps And what would have to happen to make money on one if purchased on Italian Debt?

What is a Greek Credit Default Swap?

It is an unregulated financial instrument found on the OTC market that allows someone to bet that the underlying Greek debt will go into default. Just like Paulson made Billions betting that US Mortgages would not be paid back and go into default, investors can do the same betting on Greek or Italian Debt.

Many investors are asking: "where can I buy credit default swaps?" Maybe the question should be "how can I make money on credit default swaps?" Before answering that you must first understand the basics...

The Basics On How To Use Credit Default Swaps

The first idea in using a Greek Credit Default Swap or an Italian Credit Default Swap is for Hedging Credit

It's the quickest easiest way to enter a short. To buy a CDS is less complicated then entering into a short position on cash bonds.

CDS allow capital or If you have a lot of your business funds in something like Italian Debt then buying CDS would guarantee a percentage of your debt and free up credit to allow more expenditures for expanding.

Credit Default Swaps allow a company to transfer risk easily and quickly without having to notify client.

CDS are in a grey area in tax implications and may avoid them all together.

Using Credit Default Swaps to Invest In Credit

You don't have to own Italian or Spanish or Greek Debt to buy Credit Default Swaps on them. You just have to know where to buy the Credit Default Swaps.

Credit Default Swaps can be used to speculate as an investor on the deteriorating condition of certain debt.

Credit Default Swaps are risky because of their nature and depend largely upon the reliability of the counter party in the transaction.

Credit Default Swaps will allow you to invest in a foreign market without having to bear the load of having to risk being in that particular currency.

Credit Default Swaps do not require investors to own the underlying so they are leveraged in nature. For example, right now if you are in the know on where to buy a CDS then an investor could put around a half a million dollars down and have it pay off to the tone of $10,000,000 (the amount of debt insured for $500k).

When and under what circumstances Credit Default Swaps become payable are up to the individual terms and conditions of the agreement made at the time of purchase.

Make Money On Italy

Very simple. If you think Italian debt will go bad then you will first need to contact someone who sells Credit Default Swaps in Italian Bonds then you will need a minimum net worth of around $10,000,000 dollars to qualify for this type of risk with $500k.

If you meet the criteria you may contact me and I will give you a referral. Good Luck!

Click Here to Read More Of Alicia Badillas Wiki Pages:
The Buffet Rule Is Not Unfair
6 Reasons Why Smart Investors Choose Options Trading Over CFD Trading

Buying Greek Credit Default Swaps or Italian Credit Default Swaps are risky in nature and as such are only available to a special type of sophisticated investor who meets certain net worth requirements. See author profile on more information on where to buy Greek credit default swaps (Greek CDS, Italian CDS) or Italian Credit Default Swaps.


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author avatar Alicia Badilla
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I'm a Traveler/Writer/Investor At times I interview interesting professionals. Thank you for reading.

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author avatar Wendy
19th Feb 2014 (#)

seriously?... I need to already have a net worth of $10,000,000?! This BS is how the "rich keep getting richer". If you ACTUALLY wanted to help other people out, point us to the companies that will take the "little guys" on based on what they can afford so they can grow their small net worth into something bigger ei. I can invest $5000, where are the companies that will help me out with this?

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