CORRECTED-CDS volumes suggest US credit riskier than Europe

(Corrects 7th paragraph to show buying protection is equal to
a "short" view)
NEW YORK, April 16 (Reuters) - Net volumes in credit
default swaps on the the benchmark U.S. high-grade CDS index
exceed those on its equivalent in Europe, which may reflect a
more bearish view of U.S. credit, according to a report by
Credit Derivatives Research on Thursday.
Gross volumes on U.S. and European CDS indexes are about
the same, based on data by the Depository Trust & Clearing
Corp, though net volumes in the U.S. greatly exceed those in
Europe, Tim Backshall, chief strategist at the research firm
said in a report.
This "suggests investors positioning for U.S.
underperformance in our view," he said.
Gross volumes in global CDS markets grew by only $53
billion globally last week, the DTCC said on Thursday in its
weekly report of CDS volume changes.
Changes in the way U.S. CDS are traded may have been a
factor behind the low volumes, though trading is expected to
increase in the coming weeks, Backshall said.
"We remain convinced that CDS market participants are
primed -- either long or short -- but unwilling to add/remove
risk en masse in this market; perhaps waiting for the equity
market to leg one way or another," he said.
Credit default swaps are used to insure against a borrower
defaulting on their debt or speculate on their credit quality.
When an investor buys protection they are taking a "short"
position, and when they sell protection they are taking a
"long," or positive, view of the debt.
CDS changes that reflected deteriorating perception of
credit quality during the week were on International Paper
, Whirlpool Corp , Burlington Northern Santa Fe
Corp , Germany, Porsche , Telus Corp ,
Residential Capital, United Parcel Service , HCA Inc and
Toll Brothers , said Backshall.
Positive sentiment was reflected in CDS on Italy, Ford
Motor Co , France Telecom VolksWagen ,
Sempra Energy , AB Volvo , BNP Paribas
and Ireland.
((karen.brettell@thomsonreuters.com; +1-646-223-6274; Reuters
Messaging: karen.brettell.reuters.com@reuters.net))
Keywords: CDS VOLUMES/DTCC

(C) Reuters 2009. All rights reserved. Republication or redistribution of
Reuters content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Reuters. Reuters and the Reuters
sphere logo are registered trademarks and trademarks of the Reuters group of
companies around the world.

nN16288532