Investors Increase AI-Related Credit Default Swap Trading to Hedge Against Industry Debt Risks
3 day ago / Read about 0 minute
Author:小编   

On October 20, according to the Financial Times, investors are flocking to purchase credit default swaps (CDS) to protect their portfolios against potential risks arising from a possible decline in the AI boom. CDS, a financial instrument that gained notoriety during the global financial crisis, is now seeing a sharp rise in trading volume. To raise trillions of dollars for AI infrastructure development, companies are borrowing heavily, driving up demand for CDS-like "insurance" derivatives that pay out in the event of a debt default by the underlying companies. According to Morgan Stanley research, in September, CDS linked to bonds issued by companies such as Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom, and Nvidia averaged over $9 billion in weekly trading volume, up from less than $2 billion in July. Institutional data shows that trading volume in U.S. corporate CDS indices has already surpassed last year's total for the entire year.