HELP! Does anyone know what LCDS is?
If a firm is tops in trading at LCDS, what is LCDS and what does it stand for? Thanks!
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Credit Default Swaps on Leveraged Loans the LCDX is an index of a series of LCDS
Liquid Crystal Display of course
LCDS stands for loan credit default swap, which are credit default swaps on secured loans, versus standard CDS which are unsecured credit default swaps (something that an investor might buy to hedge or arbitrage their investments in a Company's in a company's unsecured bonds). One might buy LCDS if they are looking to hedge their position in a leveraged loan, for example if they own a portion of a company's secured term loan B.
Leveraged Loans for clarification are large loans usually with an average life between 3-10 years made to corporations, LL are usually rates by rating agencies and but are precieved as being risky because the company that is taking out the loan already has a high level of debt, they are senior to bonds, LL are often issues to fund LBOs
LCDS --- is a derivative contract that isolates the credit risk of the company, it can be used to hedge or speculate.
Can go to http://markit.com/information/products/lcdx.html for additional info.
or even better, http://www.lcdcomps.com/press/LoanMarketguide.pdf on p.21
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