HypoVereinsbank protection costs widen after poor Q3 results

Poor third-quarter results released by HypoVereinsbank on Wednesday prompted the cost of credit protection for the German banking group’s senior, five-year debt to widen 30 basis points to 140/165bp by trading mid-session today. HypoVereinsbank’s net loss of €360m was significantly higher than forecast, with a large jump in loan provisions.

HypoVereinsbank shares tumbled €2.52, or more than 15%, to €14.10 following the earnings release on Wednesday. Today its share price sank as low as €12.85.

Credit derivatives traders in London today said the cost of debt protection for the rest of the German banking sector was being drawn wider as sellers of protection pulled back offers.

Five-year senior protection for Commerzbank traded today at 155/195bp, up 10bp from yesterday. Protection for Dresdner Bank was 5bp wider at 75/85bp; while

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