Cost of Insuring Portugal Debt Hits Record High

Monday, 26 Apr 2010 10:43 AM

 

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The cost of insuring Portuguese government debt against default jumped to a record high on Monday on concern that Portugal could be next to suffer a Greek- style debt crisis if no lasting solution was found for Athens.

The price of insuring against a Greek debt default also rose, to 619,000 euros ($824,250) per 10 million euros of exposure from 614,600 euros at the New York close on Friday, according to credit default swaps data from CMA DataVision.

Portuguese 5-year CDS rose to a record 318 basis points from from 278.8 bps at the New York close on Friday.

They were last seen at 305.5.

"The Greek crisis has started to spread to the rest of the periphery and Portugal seems to be next in line.

The situation there is less urgent than in Greece, but the medium-term outlook is challenging," said Darren Williams, senior economist at Alliance Bernstein.

"Unless Europe's leaders can draw a line under the situation, Portugal could face an uncomfortable period."

The premium investors demand to hold 10-year Portuguese government bonds rather than euro zone benchmark German Bunds hit a euro lifetime high of 205 basis points versus 193 bps at the European settlement close on Friday. (One basis point is equivalent to 0.01%, or one-hundredth of a percentage point.)

© 2014 Thomson/Reuters. All rights reserved.

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