Prices of Credit Default Swaps (CDSs) sharply and suspiciously increased between January and March 2020 prior to the decision of defaulting on the Lebanese Eurobonds became public. Recently published information is pointing to insider trading and price manipulation.
Winning the lottery
Someone who would have bought a CDS in early January of that year – published by Ici Beyrouth news website. At the beginning of January 2020, a CDS was trading at $2,285. It catapulted to over $25,000 on March 12 when the government officially announced suspension of payment (a.k.a. default) and informed bondholders of the matter. In March 2020, a payment of close to $400 million was ruled in favor of investors holding credit insurance on Lebanon’s Eurobonds according to a binding decision from a CDS committee.
