How is it possible to trade on the credit risk associated with nations? Say I think Spain's ratings going to be downgraded, how is it done, are there any retail trading instruments for this. Apparently, CDs are not traded on any exchange, so how are they traded and is there an alternative to them to achieve the same purpose? Any helps appreciated.
CDS are treaded OTC. The closest proxy you can get is trade the BTPS (Italian bond) future vs the German bund future on Eurex.