Tuesday, March 29, 2011

Portugal, Greece Debt Insurance Costs Rise After Downgrades

Wall Street Journal
March 29, 2011

The debt insurance costs for Portugal and Greece rose after their credit ratings were downgraded by Standard and Poor’s Corp.

The S&P move brought its rating on Portugal to one notch above junk status, and its five-year credit default swap spread felt the effects of the decision more than Greece, which S&P already rated in junk territory.

Portugal’s CDS spread jumped to 5.55 percentage point in reaction to the downgrade from 5.40percentage point earlier and a closing level Monday at 5.39 percentage point, according to data-provider Markit.

A rise of one-hundredth of a percentage point in the cost of five-year CDS equates to a $1,000 rise in the annual cost of protecting $10 million of debt for five years.

The CDS level on Greece moved out to 9.70 percentage point from 9.65 percentage point earlier and closed at 9.67 percentage points.


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