CDS MARKET
SoftBank credit default swaps hit 4-year high as AI profitability concerns mount
SoftBank Group’s five-year credit default swap spread climbed to a four-year high as investors grew increasingly concerned about the profitability of artificial intelligence investments. Rising borrowing costs, questions over returns from its OpenAI investment and uncertainty surrounding AI infrastructure spending have added to credit market concerns.
Bank CD rates surge above 8% amid liquidity squeeze, rising T-Bill yields
Public-sector banks have recently increased one-year certificate of deposit rates beyond 8%, influenced by stricter liquidity and high treasury-bill yields. The reduction in banking liquidity has led to a noticeable rise in CD issuances lately. Observers predict further policy rate hikes to address inflation effectively, signaling that the current rates may not yet reflect their maximum potential amidst ongoing market fluctuations.
Is India a “shadow transshipment” hub? The data says otherwise
Between 2014 and 2024, India’s goods exports to the US grew 1.86 times, while US exports to India grew 1.94 times. A rising two-way relationship, with India’s global exports also up 1.36-fold, is hard to square with a “mere pass-through” story tailored to one market.
Rising borrowing costs signal funding risks for global AI expansion: Jefferies report
As the financial markets grapple with emerging pressures, substantial investments in artificial intelligence infrastructure are evident. Companies like Oracle and CoreWeave are facing heightened credit risk, indicating struggles with borrowing amidst rising financing costs. Investors need to keep a close eye on credit spreads to gauge the viability of AI project funding.
Rising borrowing costs signal funding risks for global AI expansion: Report
Financial markets are facing elevated credit risks, particularly for firms operating in the artificial intelligence infrastructure sector. A recent Jefferies report highlights stringent borrowing conditions, which have raised alarms for future AI investments. Companies such as Oracle and CoreWeave are seeing increased credit spreads, driving up borrowing costs. While funding for AI initiatives remains steady, potential growth slowdowns may pressure companies.
Explained: Why are credit default swaps unnerving AI investors?
Although shares in companies driving the AI boom are still among the biggest gainers on global equity markets this year, many have fallen sharply in the past few weeks, as investors reassess the cost of capital against a backdrop of rising interest rates and inflation.
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Why are credit default swaps unnerving AI investors?
The cost of insuring against the risk of potential US tech defaults has hit record levels in the latest sign of credit stress building in the so-called AI trade, especially for data centres dependent on future revenue.
Best CD rates today, Oct. 14: 11-month or 12-month at 4.40% APY? What the Fed’s September hike means for your pick
The best short-term certificates of deposit (CDs) are offering yields of around 4% to 4.40% APY on Wednesday, October 14. Capital One is offering 4.40% APY on its 11-month CD, while Marcus by Goldman Sachs is offering the same annual percentage yield (APY) on its 12-month CD. Both give savers a way to lock in a return instead of leaving their money exposed to changing deposit rates.
Get access to TradingView charts on Bajaj Broking: No additional subscription needed
Bajaj Broking has seamlessly incorporated TradingView's powerful charting tools within its platform, enhancing the trading experience for users. This feature enables traders to easily filter stocks, receive price alerts, and choose from a variety of chart formats. Additionally, they can place and modify orders intuitively, oversee their positions without changing screens, and access derivative information along with live market prices.
RBI MPC rate hike: Experts decode what the policy decision means for mutual fund investors
The RBI raised the repo rate by 25 basis points to 5.50%, its first hike in nearly four years. Mutual fund managers favour short-duration, high-quality debt, while cautioning investors on duration, inflation, crude prices, global rates and tightening liquidity.
Banks cut CD borrowings by Rs 1.3 lakh crore in a month amid RBI liquidity boost
Indian banks significantly decreased the issuance of certificates of deposit, lowering outstanding amounts by ₹1.3 lakh crore. This change followed a boost in liquidity from the Reserve Bank of India's foreign currency deposit scheme. As a result, the need for short-term funding decreased, leading to lower call rates. Fresh CD issuance slightly increased, but rates fell notably, affecting overall funding costs.
Oracle share price: ORCL stock jumps at NYSE, what is making it one of top turnover stocks in Software & IT Services sector
Oracle stock: Oracle's move to protect itself against potential delays at a massive data center project developed by Blue Owl in New Mexico sent a chill through the trillion-dollar market for AI infrastructure financing.
Why is Oracle’s debt suddenly flashing warning signs? Its 8% bond yield raises a bigger question about who will finance the trillion-dollar AI data-center boom
Bond investors are actively hedging against Oracle. The cost to insure the software company's debt reached a record high this week. Its 6.7% bonds maturing in 2056 crossed an 8% yield for the first time. It sits half a percentage point higher than the average yield for lower-tier B2/B debt. Oracle currently holds a Baa2/BBB- credit rating. One downgrade drops it into junk territory.
CD rates diverge as liquidity surges, rate hike bets rise
Within the Indian financial landscape, the contrast between short- and long-term certificate of deposit rates is becoming increasingly evident. Short-term rates are experiencing a decline thanks to heightened liquidity from foreign currency inflows. Conversely, long-term rates are climbing, fueled by expectations surrounding future interest hikes. Financial experts warn that borrowers could face higher costs as both inflation and global interest rates continue to rise.
India bonds inch up as traders assess RBI liquidity steps
Indian government bonds climbed on Tuesday as investor sentiment shifted, responding favorably to the Reserve Bank of India's recent temporary liquidity draining measures. These actions helped calm worries about stricter monetary policies. Furthermore, the stronger-than-anticipated inflows from the RBI's dollar deposit initiative reduced financial tensions, even though international interest rate uncertainties influenced demand for longer-term bonds.
Make growth piggyback on savings
Household savings are increasingly held in financial assets, not physical ones. This shift creates a significant mismatch for long-term investment needs. Banks face a growing deposit-to-credit gap as savings move away from traditional accounts. India requires deeper long-term debt markets to finance its ambitious growth plans. Fixing this financial architecture is central to the nation's next growth phase.
Sebi allows mutual funds to buy, sell credit default swaps
Markets regulator Sebi on Friday allowed mutual funds to both buy and sell Credit Default Swaps (CDS), a move aimed at increasing liquidity in the corporate bond market. This flexibility to participate in CDS would serve as an additional investment product for mutual funds, Sebi said in a circular.
View: Let the swap market bloom
Ever since the 2008 financial crisis, CDSs have evoked a negative perception. In India, mutual funds (MFs) are permitted to buy CDS to hedge risk on corporate bonds held in fixed maturity plans (FMP) having a tenor of more than one year. Sebi is mulling whether MFs should be allowed to buy CDS to hedge credit risk on debt securities held in all their schemes.
US debt ceiling impasse pushes government credit default swaps to record high
Spreads on U.S. one-year credit default swaps (CDS) - market-based gauges of the risk of a default - widened to 172 basis points, an all-time high, according to S&P Global Market Intelligence data, up from a close of 163 on Tuesday.
Sebi allows AIFs to participate in Credit Default Swap transactions
CDS is a specific kind of counter-party agreement which allows the transfer of third party credit risk from one party to another.Under the new norm, Category-I and Category-II AIFs can buy CDS on underlying investment in debt securities only for the purpose of hedging, while Category-III AIFs can purchase CDS for hedging or otherwise, within permissible leverage, the Securities and Exchange Board of India (Sebi) said in a circular.
RBI elevates rural banks while booting risk framework
The market had already factored in an enhanced role for mutual funds and insurance companies in managing surplus liquidity generated by the central bank purchases of bonds and foreign currency. But Mint Road did one better: It allowed in a new participant, the regional rural banks.
Pope’s beef with CDS market is a beef with all markets
On Thursday, Pope Francis delivered a wide-ranging speech about financial markets.
No CDS market yet for new Apple mega-bond
A market has yet to materialize for credit default swaps offering protection on Apple Inc's record USD17bn bond issue, despite the enormous size of the deal.
RBI permits CDS in unlisted corporate bonds
In order to better the manage credit risk by the fund managers, the RBI today allowed Credit Default Swaps for unlisted rated corporate bonds in addition to listed ones.
IRDA allows insurance cos to deal in credit default swaps
Insurers are allowed only as users (protection buyers) of CDS subject to condition, IRDA said in a final guideline for investment in CDS.
Mutual funds allowed to participate in Credit Default Swap (CDS) transactions
Market regulator Sebi today allowed mutual funds to participate in Credit Default Swap (CDS) transactions, which allow business entities to hedge risks associated with the bonds market.
Credit-default swaps will catalyse growth of bond markets
Credit-default swaps norms will enhance investment avenues beyond the traditional favourites in the high-safety category.
'RBI must let FIIs join credit default swap market club'
RBI had earlier this month published a draft report on allowing credit default swap as over-the-counter derivatives products in India.
Credit default swaps take a dip for most companies
The overseas derivatives market has turned bullish on Indian papers. Credit default swaps (CDS) of Indian companies on five-year debt in overseas markets fell sharply following the US Federal Reserve’s decision to cut interest rates by 50 basis points.
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