Credit Suisse — Triggering Another Financial Crisis?
Last week, Credit Suisse’s credit default swaps yield, or CDS spiked more than 5% (500 bps) in a day, rising more than Barclays’ and Deutsche Bank’s CDS.
This post was originally posted here. The writer, Willie Keng is a veteran community member and blogger on InvestingNote, with a username known as @Willie and has close to 200 followers.
Now, credit default swap is like an insurance policy against a default event on an asset – for example, a bond.
Investors pay the yield on the CDS, also called an insurance premium.
In some ways, a CDS measures an asset, or company’s default risk.
This implies — the higher the CDS yield, the more expensive insuring a riskier asset.
