Credit default swaps at new record high
The cost of insuring against default on Greek government debt surged to new records yesterday.
Credit default swaps on Greece soared 435 basis points to 2,189, according to CMA market data. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped nine basis points to 235. An increase signals deteriorating perceptions of credit quality. Investors are betting Greece will default if it’s unable to pass the austerity measures needed to qualify for the next installment of international aid.
Investor confidence in Irish debt was also hurt yesterday by comments from Irish Finance Minister Michael Noonan that senior bondholders should share in the losses of Anglo Irish Bank Corp and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities.
Credit default swaps on Ireland rose 37 basis points to 799.