A bank's structured desk probably won't take calls from an individual unless you are Warren Buffet. Even if you were, you would have a team of brilliant guys conspiring to rob you. The CME has been trying to get a sliver of the market for over a two decades by offering itself as a clearinghouse to remove counterparty risk. I think you have to be backed by an Investment Bank for this. http://www.cmegroup.com/trading/cme-direct/
The problem with mega-mogul people is that they are the "private banks to these banks" : example Warren Buffet lending money to Goldman Sachs during the crisis. So I wonder who will "robbing who".
That's a good find. But, I think the product is getting re-worked. Banks are hesitant to support the exchange OTC products. Transparency = lower product margins. Regulators should strong arm them into using exchange clearing facilities. http://www.bloomberg.com/news/2014-...-of-credit-swap-futures-that-mimic-index.html
High yield bonds are highly correlated to equities. Investor could also have reduced or short exposure to SPY or IWM, instead of CDS
I have generally stayed away from High Yield investing because it fuzzies my allocations. However, I have recently seen hedge fund industry reports of High Yield and Convt Arb to produce Sharpe ratios of 4.0-6.0. Obviously, their edge is from 144A Private Placements. Or maybe, holdings that are valued a little bit more conservatively than mtm?..Not sure. Still, it would be a nice place to lever up a trading strategy if you can even produce 1/2 to 1/3 that Sharpe. The tight yield spreads look really scary though.