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From Puerto Rico to Greece, Credit Traders Put on the Defensive 

June 30, 2015

Cordell Eddings, Nabila Ahmed, Bloomberg Business

A day before debt traders closed the books on the first half of 2015, the dual threats of default by Greece and Puerto Rico spurred them into defense mode.

Trading in insurance-like contracts surged to the most in at least three months on Monday as investors and banks sought to preserve what little gains they still had for the year. The biggest exchange-traded fund that buys junk bonds dropped to the lowest level since December. And measures of credit risk in both Europe and the U.S. jumped.

The activity underscored the uneasiness of investors already grappling with a Federal Reserve that’s planning its first interest-rate increase in nine years. By the time trading started Monday in London, they also were faced with capital controls and a government-imposed bank shutdown in Greece, in addition to a Puerto Rico governor who warned holders of its $72 billion of debt to brace for losses.

Read more: Bloomberg Business

 
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