how-to-beat-the-credit-crunch

How to beat the credit crunch

Widening credit spreads can be an investor's friend thanks to a range of new structures that use credit spread options, according to Deutsche Bank.
The recent spike in credit spreads caught a lot of investors off guard but there are products now available, even in the private bank market, that can offer a good hedge against short-term credit spread widening.

Deutsche Bank has been marketing a suite of credit volatility structures to distributors since early June and the lucky investors that bought into these products are now walking away with returns that range from 15% upwards on a one-month investment thanks to the timely July spike.

Credit spreads on the five-year iTraxx Europe index of credit default swaps CDS started July at about 25bp, widened to about 36bp by July 25 and then sky-rocketed to almost 70bp by July...
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