By Nell Mackenzie and Lucy Raitano

LONDON (Reuters) -Boaz Weinstein’s Saba Capital Management has sold credit derivatives in recent months to lenders seeking protection on big tech names like Oracle and Microsoft due to concerns over a debt-financed AI investment frenzy, a source told Reuters. Banks have sought to shield their exposure to potential losses by buying credit default swaps (CDS) from the U.S. hedge fund manager, known for his winning bet against the JPMorgan Chase trader dubbed the “London Whale”, the person said.

While the credit insurance rises in value in tandem with the perceived risk of a company’s default, current prices indicate those risks are still low compared to other sectors.

Saba sold banks CDSs on Oracle, Microsoft, Meta, Amazon and Google parent Alphabet, sai

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