Trading of credit-default swaps linked to Saudi Arabia is increasing, boosting the nation to the ranks of the world’s most active contracts for the first time, according to the Depository Trust & Clearing Corp.
Saudi Arabia was the 93rd most traded entity last week, when 65 contracts changed hands, after previously being outside of the top 1,000 tracked by DTCC. A total of 215 contracts on the kingdom are outstanding, covering a net notional value of $511 million, DTCC data show.
Trading is increasing even though Saudi Arabia has no international debt, as investors seek to protect against the risk of political turmoil in the world’s biggest oil supplier. Swaps are being used to speculate on contagion from upheavals in neighboring countries, as a proxy for government-controlled companies such as petrochemical maker Saudi Basic Industries Corp., and to hedge debt the nation may sell in future.
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