JPMorgan, Barclays Offer CDS on Ares, Apollo, Blackstone Funds, Opening New Risk Market
Summary
JPMorgan and Barclays are reportedly among the banks now offering Credit Default Swaps (CDS) on funds managed by major alternative asset managers, including Ares Capital (ARCC), Apollo, and Blackstone (BX). This development is significant as it introduces a new, liquid market for hedging and speculating on the credit risk of private credit funds, which have historically been less transparent. For Ares Capital, this means its funds are now subject to a new layer of market scrutiny and potential volatility based on credit perceptions. While providing risk management tools, the availability of CDS could also signal increased market attention to potential credit risks within the private credit sector. Traders should monitor the pricing and liquidity of these CDS as a key indicator of sentiment and potential impact on fund flows and the cost of capital for these managers.
At the time of this announcement, ARCC was trading at $18.83 on NASDAQ in the Finance sector, with a market capitalization of approximately $13.5B. The 52-week trading range was $17.40 to $23.42. This news item was assessed with neutral market sentiment and an importance score of 8 out of 10. Source: Reuters.