In line with the cash share price tumble the Credit Default Swap on BP broke higher by 20 basis points 10 trade at 103bps over 3 month LIBOR.
The, The cost incurred to buy Credit Default Swap protection on corporate bonds from climbed to the highest level this month.
Judging by the credit default swap spreads on Italy, Spain, Greece, Portugal and now government bonds in France, the risks to bondholders is growing.
Greenberg superimposed the credit default swap guarantee business on a sound insurance underwriter.
And lowish credit-default-swap spreads on banks such as Deutsche Bank and Credit Suisse partly reflect the assurance of government help if needed.
Credit-default-swap spreads on European bank bonds are in almost all cases higher for banks that have less capital.
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In recent weeks there has been a rise in both LIBOR (a gauge of banks' borrowing costs) and the credit-default-swap spreads on bank bonds (the cost of insuring against default risk).
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Portugal may be the best bet (no pun intended) based on credit default swap rates, and that certainly is consistent with the current speculation about an official bailout.
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This downward spiral may have been exacerbated by Europe's efforts to cut the value of Greek sovereign debt without triggering a payout on credit-default-swap contracts.
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Perhaps those memories are weighing on the minds of credit default swap traders.
These large cap stocks have dividend yields greater than the average yield on 10-year corporate paper, and 5-year credit default swap spreads tighter than that of 5-year U.S. debt.
If Bear had been allowed to go bust, it would have put huge pressure on its counterparties, including the likes of JPMorgan Chase (which is the biggest credit-default swap player, one reason it was keen to do a deal).
The most sweeping intervention of all came from Ireland's government, where concerns about spiking credit-default swap (CDS) spreads, falling share prices and jittery depositors led the finance minister to announce, on September 30th, a blanket guarantee on the deposits and almost all the debts of the country's six biggest banks until September 2010.
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