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CDS spreads on US banks tighten

Credit default swap (CDS) spreads on several US and European institutions tightened by close of trading on Friday as the impending bailout bill and a number of government initiatives restored confidence in the markets.

The Credit Derivatives Research Counterparty Risk Index, which averages the five-year credit default swaps (CDS) spreads of the 15 largest credit derivatives dealers, dropped to 338.4 basis points, down from 360.4 bp on Thursday.

Goldman Sachs, which along with Morgan Stanley recently applied to become a bank holding company, saw its five-year CDS spreads move in to 400bp on Friday, down from 426

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