The US investment bank Morgan Stanley launches new credit default swaps within European leveraged loans in an attempt to expand on loan market.

The move signals possible spur in development of the market and will help Morgan Stanley expand on European loan market. In the time of fast-growing credit default swaps, this step was also taken by Morgan Stanley to search new ways for its development amid the growing competition between banks.

The number of banks reporting record volumes of trading in products such as the iTraxx index, a basket of CDS instruments, is growing rapidly. Earlier, credit default swaps were mainly used within investment-grade credits or high-yield bonds.

Morgan Stanley’s plan consists of developing CDS based on leveraged loans with the initial base of 25 to 30 of the most actively traded loans in the European market.

Leveraged loan investors will be more protected with Morgan Stanley’s CDS, the company said.