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Investors Trade CDS On Dead GM Debt

Banks and hedge funds have been trading credit default swaps on nonexistent General Motors debt, reports The Wall Street Journal.

Banks and hedge funds have been trading credit default swaps on nonexistent General Motors debt. Despite the fact that the automaker has canceled USD40billion debt in bankruptcy and has said it would slash its remaining USD4.6 billion bank loan this year, hedge funds appear to be selling CDS on GM and buying CDS on rival Ford Motor on speculation that GM's perceived risk will decline relative to Ford’s.

Click here to read the story from The Wall Street Journal

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