A French company files for bankruptcy, triggering various CDS contracts. It has two series of senior bonds
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A French company files for bankruptcy, triggering various CDS contracts. It has two series of senior bonds outstanding: Bond A trades at 30% of par, and Bond B trades at 40% of par. Investor X owns €10 million of Bond A and owns €10 million of CDS protection. Investor Y owns €10 million of Bond B and owns €10 million of CDS protection.
Determine the recovery rate for both CDS contracts.
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Bond A is the cheapest...View the full answer
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Saud Ur Rehman
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