| NEW YORK, April 29
NEW YORK, April 29 Trading in emerging market
credit default swap contracts fell 10 percent in the first
quarter to $212 billion from the year-ago period, as activity
among European sovereigns declined further, a new survey showed.
Data released on Monday by EMTA, the trade association for
the emerging markets debt trading and investment industry,
showed that volumes fell from the $235 billion in the first
quarter of 2012.
Credit default swaps are used by investors to help protect
fixed income investments from defaults or restructurings.
But volumes jumped 49 percent from the $142 billion in the
fourth quarter, reflecting "abnormally low" levels at the end of
last year, "when the reduction in risk limits - and the exit
from the market by some dealers - led to a low level of
activity," said Hongtao Jiang, head of EM sovereign credit at
As a result, the higher quarter-on-quarter volumes were more
likely a correction than an upward trend in activity, he added.
At $48 billion, Brazilian CDS contracts posted the largest
volume in the survey. Jiang pointed to proxy demand for
Brazilian CDS because of corporate weakness in Latin America's
Mexico and Russia also posted high volumes, at $28 billion
and $17 billion respectively.
Activity continued to drop off among European Union
sovereigns, Jiang said, perhaps because of a regional ban on
naked long protection positions as of late 2012.
Among corporate CDS, Brazilian state-owned energy company
Petrobras saw the highest volume, with $2.6 billion.
Other corporate CDS contracts with more than $1 billion in
trades included Russia's state-owned energy company Gazprom
, Mexico's state oil monopoly Pemex and
Venezuela's state oil company PDVSA.