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Hedge Fund Spain Credit Default Swaps

Hedge Fund Spain Credit Default Swaps

Hedge Funds Look for Relative Value Trades in Spain

Hedge funds appear to have found an opportunity in Spain with relative value trades on underpriced securities. Hedge funds have been lining up to place bets based on what they see as the mispricing of credit default swaps, Spain government and corporate bonds and stocks.  This is similar to what happened in Greece with hedge funds buying up credit default swaps.
Hedge funds have spotted money-making opportunities in Spain, betting that market fears over the southern European country's deepening debt crisis have made some assets too cheap relative to other securities. 
Managers have been exploiting what they see as the mispricing of credit default swaps (CDS), government and corporate bonds and stocks, after months of growing market concern that Spain might need an international bailout, using relative value trades - betting on one security versus another. 
"There's probably more juice for relative value trades than directional plays," said one fund of funds manager who spoke on condition of anonymity. "It's a pretty well-flagged story. I don't know how much juice they think is in it," the fund manager said of Spanish CDS bets. 
The moves echo the earlier stages of the euro zone crisis, when hedge funds - renowned as being among the nimblest of investors - bought CDS - designed to pay out in the event of default - on Greece and other weaker euro zone countries.Source

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