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How Total Return Swaps Pile on Risk For Bondholders

Bloomberg Markets Tuesday 06 October 2026, 05:15 UTC By Sujata Rao and Matthew Hill 1 min read
Key Points

Explainer How Total Return Swaps Pile on Risk For Bondholders Some governments in need of money have been turning to an obscure financial product typically used by hedge funds, exposing bond investors to new risks. Angola, Nigeria and Senegal have used so-called total return swaps to raise billions of dollars from commercial banks by offering their bonds as collateral. Problems can arise when a nation runs into trouble and needs to ask for debt relief.

Explainer How Total Return Swaps Pile on Risk For Bondholders Some governments in need of money have been turning to an obscure financial product typically used by hedge funds, exposing bond investors to new risks. Angola, Nigeria and Senegal have used so-called total return swaps to raise billions of dollars from commercial banks by offering their bonds as collateral. Problems can arise when a nation runs into trouble and needs to ask for debt relief. Because TRS holders may have a claim on a government’s assets in a debt restructuring, regular bondholders and other creditors could end up shouldering more losses than they would otherwise.
Angola (LOCATION) Nigeria (LOCATION) Senegal (LOCATION)
Originally published by Bloomberg Markets Read original →

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