According to the EMTA, the emerging markets debt trading and investment industry trade association, emerging market credit default swaps (CDS) trading volume rose 46% in 2014 versus 2013, driven by economic and political disruptions related to energy in both Russia and Brazil (Note: CDS act as a kind of insurance for investors who own debt against potential default or restructuring).
Volumes for CDS totaled $1.56 trillion last year versus $1.064 trillion in 2013. Fourth-quarter 2014 trading volumes also rose 39% to $385 billion on a year-on-year basis and increased by 2% from the third quarter of last year.
A corruption scandal at Brazilian state-run oil company Petroleo Brasileiro Petrobras SA (NYSE: PBR) along with a faltering economy raised investor concerns about the country with Brazilian CDS trading volumes being the largest of any single sovereign during the fourth quarter at $68 billion.
Trading in Russian CDS during the fourth quarter also surged 112% year over year to $47 billion, but that was down 30% versus the prior quarter. Turkish and Mexican sovereign CDS trading volumes were at $36 billion each plus Mexican state-run oil company PEMEX had $2 billion in trading volume.
To read the whole report, EMTA Survey: Emerging Markets CDS Trades at US$1.560 Trillion in 2014, go to the website of the EMTA.
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