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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Perspective who wrote (71382)	10/8/2006 2:35:23 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Kara Cascade? globaleconomicanalysis.blogspot.com Mish

To: Perspective who wrote (71382)	10/8/2006 11:52:34 AM
From: YanivBA	Respond to of 110194

how much equity are the sellers required to put up? Well, I don't know. You will need to find a CDS trader to answer that. I guess it also changes from broker to broker and client to client. To my understanding the whole point of a CDS for the seller is leverage. Otherwise, what is wrong with the bond? As far as I know CDSs are traded off the counter so that would mean that there is no minimum margin beside what the broker would demand. Notice the "unfunded" part: I also guess that because ABX.HE bundles a collection of mortgages, defaults come in gradually.Unlike with a corporate bond you don't have a singular credit event. You have a stream of small events that get priced in as you go. This means that the broker can be a lot less afraid and can offer more leverage than he does for corporate CDSs. YanivBA.