Following up on November 22's ""Cost of insuring against Oracle debt default spikes as September seems a long time ago" (ORCL)".
From Reuters, November 18:
Boaz Weinstein's Saba Capital Management has sold credit derivatives in recent months to lenders seeking protection on big tech names like Oracle and Microsoft due to concerns over a debt-financed AI investment frenzy, a source told Reuters.
Banks have sought to shield their exposure to potential losses by buying credit default swaps (CDS) from the U.S. hedge fund manager, known for his winning bet against the JPMorgan Chase, trader dubbed the "London Whale", the person said.
While the credit insurance rises in value in tandem with the perceived risk of a company's default, current prices indicate those risks are still low compared to other sectors.
Saba sold banks CDSs on Oracl, Microsoft, Meta, Amazon and Google parent Alphabet
, said the source, who had direct knowledge of the deals.
Some large asset managers, including a private credit fund, were also keen to buy the product, the source said.
Microsoft and Oracle declined to comment. Meta, Google and Amazon did not immediately respond to requests for comment.
BANKS SEEK PROTECTION AS TECH FIRMS RACK UP DEBT
The development highlights a scramble to hedge against an explosion in the value of AI companies and their growing debt burdens. It also points to fears that, if the current AI enthusiasm proves to be a bubble, any pop would echo across equity markets as a sharp correction, denting the economy.The person said it was the first time Saba has sold hedging protection on some of the companies and the first time banks had asked for this kind of trade from the hedge fund.
The finance firms, the source said, were seeking protection against the debt accumulating on companies' balance sheets as they borrow heavily to fund their multi-billion-dollar AI projects.
Equity derivatives trading also saw increased client demand for hedging protection against the sector, a Goldman Sachs client note released on Friday showed.
"Some of this is concern about AI corporate bond supply over the next few quarters after a surprise surge in recent weeks," Deutsche Bank's Jim Reid said in a note on Monday speaking in general about the tech-related CDS market.
"However, it seems that they are also being used as a general hedge for all sorts of positive AI positions."....
....MUCH MORE
Coincidentally we mentioned Weinstein relieving JPM of a-lot-o-loot just this weekend:
"How The Kennedy Assassination Affected Some Stock Prices"Possibly related in a Chicago sort of way:
"How JPMorgan Enabled the Crimes of Jeffrey Epstein" (JPM)The amazing thing about this story is that nowhere in its 20,000-or-whatever-words-it-runs-to, nowhere does a "Ctrl F" return a single hit for "Crown". As in James Crown, deceased scion of the billionaire Chicago family, JPMorgan board member, Chairman of JPM's “Risk Policy Committee.” during the time that Morgan was facilitating Bernie Madoff [from Bank One Merger to Madoff's arrest], during the time that "The London Whale" was losing JPM money, ($6 Billion) to Boaz Weinstein and others and during the time that JP Morgan was dealing with Jeffrey Epstein. [again, from the time of the Bank One merger]
Chairman of the Risk Policy Committee.
Oh, and along with Leslie Wexner's right-hand-man John W. "Jack" Kessler, Mr. Crown set Jamie Dimon up to become Chairman of JPMorgan following JPM's merger with Bank One, then headed by Dimon, in 2004....
