Lurking Dangers in Debt Derivatives

Featuring David Meneret

After being decimated in the wake of the financial crisis, the bespoke debt derivative market has grown rapidly in the past three years to over $100 billion today. David Meneret, CIO at Mill Hill Capital, sees lurking risks in this ballooning market. He explains the potential dangers, and walks us through the catalysts that threaten to trigger a wider downturn. Filmed on March 28, 2018 in New York.

Published on
9 April, 2018
Leverage, Credit Market, Derivatives
29 minutes
Asset class


  • DC

    D C.

    12 4 2018 18:02

    29       0

    RV, Please: 1) Put Charts back into the Transcripts, so they are a standalone piece of material. 2) Get rid of the terrible music.
    Come on RV with me!

  • CA

    Courage A.

    11 4 2018 17:58

    0       0

    So who benefits and who suffers from this derivative risk ?

  • PJ

    Peter J.

    10 4 2018 08:39

    26       2

    Interesting presentation.

    RealVision time to change the god awful music, please !!

  • SC

    Stanley C.

    10 4 2018 06:36

    3       0


  • AL

    Alex L.

    10 4 2018 04:36

    6       0

    I just wanted to say thank you for such a fantastic and educational interview. David does a great job about breaking down a seemingly complex subject into simple terms in an interesting manner. The visuals were also very helpful (though I still made a visit to Investopedia...). That said, I'm glad I didn't happen to listen to this one via audio, because I would have been confused as to why there was music playing for a good 20 seconds with no speaking...

    Bring David back soon! I could easily listen to him quite often.

  • NA

    Nikish A.

    10 4 2018 02:08

    0       0

    What instruments should be considered on the retail side ? HYG?

  • GF

    Gordon F.

    10 4 2018 01:45

    3       0

    I just finished reading Taleb's "The Black Swan" (I know it's been out for ten years or so, but it's as relevant as ever), and what I see here are financial structures that are fragile. Sure, as long as nothing goes wrong, people can make a lot of money on them, but if/when something really goes wrong, they will blow up, and once again we will be faced with the decision to either bail out the greedy SOBs who are profiting from this fragility (not to mention amplifying it to pad their pockets), or face the entire meltdown of our banking system and economy.
    Perhaps it is true that the Fed is trying to deflate this bubble before it blows up, but I have no confidence whatsoever that they will be successful. Nor am I convinced that the banks are really that much better prepared than in 2008. Some may be, but all it takes is one or two of the really big ones (Deutsche Bank and Bank of China are two that come to mind) that go bad, and the interconnections and VAR models will set off a chain of dominoes that will take them all down.

  • MD

    Mischa D.

    9 4 2018 21:16

    3       0

    Debt to EBITDA net of cash would be more useful.

  • TJ

    Terry J.

    9 4 2018 21:12

    3       0

    I agree with Robert A that this is a timely and important update from David. I also think that this is an area of the market we may all have to get up to speed on pretty quickly, if the Fed's suicidal monetary policy continues!

  • RA

    Robert A.

    9 4 2018 16:44

    20       0

    One of the best RV interviews and why RV is so valuable was when Curator Milton rolled out an excellent timely interview with this Gentleman, another Gentleman and a great interviewer to give us much needed background days after the Short Vol ETNs blew up in February. This time Mr. Meneret is giving us some excellent background to the “Bespoke Credit Tranches” and alerting us to the four sectors where credit risk, default, and perhaps inability to roll over loans might first appear should short term interest rates continue to rise. Admittedly this is an esoteric area of the market and might not appeal to some RV’ers, but it sure would have been great to have had a little “deep background” on the sub prime Mortgage tranches prior to the 07/08 melt down. Excellent and perhaps timely piece on another potential excessive build up in the Credit market....and oh, I guess if Credit dries up in these companies....well the Equities risk should be soon to follow.....which might make these esoteric “bespoke credit tranches VERY relevant.