Financial Times FT.com

Detroit rescue raises CDS fears over GM

By Aline van Duyn in New York

Published: December 12 2008 00:34 | Last updated: December 12 2008 00:34

The terms of a possible $14bn emergency loan to Detroit carmakers are being scrutinised by the credit derivatives industry because its passage could trigger payments on billions of dollars of contracts linked to General Motors.

The need to consider the impact of a rescue on such contracts highlights the complexities surrounding financial restructuring, which would pit holders of different types of loans, debt and equities against each other.

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