Greece 5-Year Sovereign CDS Widens
Dow Jones Newswires
LONDON -- The pressure on Greece showed no sign of abating Friday with the cost of insuring the country's sovereign debt against default rising again.
According to CMA DataVision, Greece's five-year sovereign credit-default swap spreads--a key measure of credit risk--stood at 446 basis points in early trading Friday, up around 19 basis points from Thursday's close of 427 basis points.
The movement means it now costs around EUR446,000 a year to insure a notional EUR10 million of Greek sovereign debt against default for five years. That's up from the EUR427,000 it cost at Thursday's close and the EUR256,000 it cost a month ago.
"With sovereign debt and fiscal difficulties remaining a concern, sovereign spread volatility will not disappear soon," said Tim Brunne at UniCredit SpA.
Concerns about Greece's debt woes, and fears that other deficit-heavy economies in the region will run into the same problems, continue to weigh on market sentiment across the globe.
"The crisis in euro area sovereigns is reaching new proportions and the contagion is getting more serious," said analysts at Royal Bank of Scotland PLC in a note.
Portugal's five-year sovereign CDS spreads were quoted at 239 basis points, after closing Thursday at 229 basis points. And Spain's sovereign CDS spreads widened around 12 basis points to 182 basis points, according to CMA.
CDS are tradable, over-the-counter derivatives that function like a default insurance contract for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. Swap buyers may be protecting investments they own or simply making bearish bets against companies or countries.
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