Morgan Stanley's shares up 50%, but its CDS are up, too

04/6/2009 | Bloomberg

Morgan Stanley's shares are up 50% this year, but that is likely little comfort to those who trade the bank's debt because it is almost twice as expensive to insure against default as the debt of JPMorgan Chase. "It wouldn't surprise me in the least if bankers at JPMorgan point to the fact that Morgan Stanley's credit default swaps are trading outside their own to help win business," said William Cohan, a former investment banker. The situation gives JPMorgan an advantage in prime brokerage and derivatives, in which the bank's creditworthiness is crucial.

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