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15 January 2014 by HCM

Since the beginning of the year, the market has been busy trading credit derivatives. Risk premia are at historically tight levels and credit indices are trading at prices not seen since early 2008, both in Europe and in the US. That has triggered an active hedging campaign from investors who have been busy buying protection on credit indices, directly or through options. On the back of that, daily volumes stand well above what we have seen in previous years ($91.5bln on average each day of last week compared with $71bln at the same period last year, $84bln at the beginning of 2012 and $56.5bln in January 2011). Volumes were also very healthy on single names (almost $13bln per day), on the back of tight spread levels and an intense new issue pipeline. 2014 is now well underway!