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SOVEREIGN CDS CONTINUES TO WIDEN, SPAIN & PORTUGAL NEXT?

By Bondsquawk:

European Soverign CDS continues to trade worse the last couple of days with all the gains from the Monday announcement of the Greece rescue package evaporated. At its recent peak, Greece 5yr CDS was trading around 440 bps which subsequently recovered to about 375 bps after details of the European aid was released. It is currently trading around 430 bps. The higher the premium, the higher the market’s perception of a default.

Separately, there appears to be some contagion with Portugal and Spain CDS both spiking on fears that these countries are next in line after Greece. Here is where they are most recently quoted:

CDS 5YR 10YR 5Y1D 5Y1W
—————— ———— ———- —— ——
AUSTRIA (100) 57/61 62/66 2 -2
BELGIUM (25) 59/63 64/68 2 -1
DENMARK (25) 34/38 39/43 1 1
FINLAND (25) 25/28 28/32 1 2
FRANCE (25) 52/55 57/61 3 -1
GERMANY (25) 32/34 36/39 2 1
GREECE (100) 420/440 360/390 0 -10
IRELAND (100) 149/155 152/162 0 -14
ITALY (100) 126/136 131/141 1 -3
NETHERLANDS (25) 34/38 38/43 0 0
NORWAY (25) 15/19 18/22 0 -1
PORTUGAL (100) 190/200 180/200 15 25
SPAIN (100) 146/156 140/160 10 14
SWEDEN (100) 32/36 35/39 0 -2
UK (100) 73/77 77/81 1 -3
USA (25) 35/41 39/45 0 -4

The unfortunate thing about credit problems are that they never seem to go away….unless you fix the underlying issues (balance sheet, spending, revenue) every other solution is akin to using band aid’s to heal a severed limb.

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