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CDS spreads for Irish banks widen over holiday period, while peripheral EU states remain steady
The cost of insuring against a default of one of Ireland's three big financial institutions rose over the Christmas and New Year period, as five-year credit default swaps (CDSs) on Allied Irish Bank, Bank of Ireland and Anglo Irish Bank debt continued to trade up-front.
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Allied Irish CDS widened from 20% at 13:00 on December 22, 2010, to 21.5% at 13:00 on January 4. During the same period, Bank of Ireland CDSs rose from 13.5% to 15%, while those of Anglo Irish rose from 30.5% to 31%, according to market information specialist Markit.
Meanwhile, debt protection costs for peripheral eurozone sovereigns entered 2011 in a fairly tranquil mood, despite remaining high after a fraught 2010. Five-year CDS spreads on senior German debt had hit a 2010 high of 58 basis points by close of play on December 22, and were at the same level by 13:30 on January 4. During the same period, CDS spreads in Italian debt increased by 9bp, from 224bp to 233bp, while Spanish debt protection costs recorded a 5bp drop, from 347bp to 342bp. Irish CDS spreads started and finished this period on 603bp.
Greek CDS spreads were the one big mover over the holidays, registering at 1,014bp on December 22, climbing gradually towards 1,097bp on December 30, then returning to 1,014bp by January 4.
Read more: www.risk.net/risk-magazine/news/1934752/...idays#ixzz1A5dQ5roU
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