0 votes

Drum roll please: U.S. sovereign-credit spreads rise sevenfold in year

Risk gauge outpaces measure of corporate-credit risk as U.S. bails out banks

By Laura Mandaro, MarketWatch
Last update: 7:19 p.m. EDT March 10, 2009

SAN FRANCISCO (MarketWatch) -- The cost of buying protection against the risk that the United States will default on its mounting debt has surged in the past months, outpacing the rise in corporate-credit costs, now that the government has absorbed more private-sector debt.
The spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. The spreads also hit a record last week.
In contrast, an index that tracks the cost of buying credit protection against defaults on North American companies with investment-grade ratings -- the Markit CDX.NA.IG index -- has not even doubled in the past year. The index, which includes CDS on blue-chip companies like Altria Group (MO) and Bristol-Meyers Squibb Co. (BMY) , has risen 30% this year.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

This is over my head

but I bet it is bad-the way things have been going, I bet that is a safe bet!