Barclays On High Yield Hedging Using SWAPs Versus Listed Derivatives

With the global search for yield compressing interest rates on high yield bond, potentially acting like a market rubber band about to break, how does one hedge in such an environment? In a presentation to be given Thursday at the American Advisory Council, Barclays analysts Arik Ben Dor and Jingling Guan will consider the questions of passive versus dynamic approaches and bank SWAPs versus equity futures among other issues, according to slides reviewed by ValueWalk. While some bank research has indicated the need for such hedging tactics, other bank research has debated this point.

SWAPs were not an effective hedge during periods of "distress"

Hedging high yield...