How CDS provide early warning signs for investors

CDS

Lee Robinson, founder of Altana Wealth & AltanaFT, reveals how keeping a close eye on credit default swap prices can help you protect client money.

The most memorable casualties of the credit crunch in 2008 were the mighty US investment banks Bear Stearns and Lehman Brothers, but the crisis also struck a huge blow to the credit agencies. Failing to predict the banking crisis, they were unable to give timely warnings signalling the deterioration in the ratings of assets. Financial institutions reliant on these to make their judgements suffered greatly as a result. The big question though, post crisis, is if using the same methods of balancing assets and liabilities, are credit agencies still able to provide early warning signals to h...