RadioShack Corp. (RSH) is finding an unlikely ally in its efforts to stay out of bankruptcy: credit derivatives traders who amassed more than $25 billion of trades speculating how much longer it can keep paying its bills.After a 60 percent surge this year, the amount of credit-default swaps tied to RadioShack is 28 times its debt, more than any other U.S. company. When the retailer’s biggest shareholder arranged $585 million of funding in October to help it survive the holidays, much of the money came from hedge funds wagering on the company to avoid default, said people with knowledge of the trading. Those included DW Investment Management and Saba Capital Management, the people said.The derivatives are amplifying the stakes on a company with less than $1 billion of debt that’s running out of cash and struggling to compete with online competitors. By injecting the 93-year-old electronics retailer with new money, swaps traders, more often blamed for pushing companies toward bankruptcy, have been preserving big payoffs if they can delay or prevent a default.
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