Dish Network’s Debt Exchange Plan Sparks Worry Among CDS Traders

Dish Network Corp.’s debt exchange ambitions are causing consternation among traders who bought a form of insurance that pays out if the struggling satellite television company defaults, according to people with knowledge of the matter.

The traders, who purchased credit default swaps that provide compensation if a company fails to pay its debts or files for bankruptcy, are analyzing that likelihood that the exchange proposal could slash the value of their short bets by triggering what’s known as a “succession event,” said the people, who asked not to be identified because discussions are private.

Such a move would tie ...