Moody's swaps bail-in bet splits banks and buy side

Moody's Investors Service recently did something brave and far-sighted. Or, perhaps, reckless and wrong-headed. It will be hard to tell until the next time a big bank is staggering into the void. When that happens, the rating agency believes derivatives counterparties exposed to the bank are unlikely to lose money under new resolution rules. Senior bonds will be used to recapitalise the bank instead – a forecast that, for the first time, de-links the ratings for the two and sets derivatives