Sovereign CDSs at record levels

The cost of credit protection on the sovereign debt of Spain, Portugal and Ireland reached all-time highs in intraday trading this morning.

Five-year senior credit default swap (CDS) spreads referencing Spain widened to a record 153.6 basis points at 11:30am London time from 142.5bp at the close of trading yesterday after its AAA sovereign credit rating was downgraded by credit rating agency Standard & Poor's.

CDSs on Portugal moved out to 147.9bp from 134bp, while the cost of credit protection on Ireland jumped to 281bp from 275bp, according to credit information specialist CMA Datavision.

CDSs on US sovereign debt, which closed at 69bp yesterday and reached an all time high of 70bp early this morning, tightened slightly to 68bp. The cost of credit protection on the US has increased more than tenfold from 6bp in April 2008.

The financial sector was also hit by declining confidence; spreads on Abbey National were at 106.2bp at 10:30am London time, out from 90bp yesterday and the cost of protection on HSBC increased to 116bp from 106.3bp. CDSs on Anglo Irish were at 397bp out from 346.9bp as a bill to nationalise the bank enters parliament.

Spreads on ING's Amsterdam-based insurance arm ING Verzekeringen, which tightened dramatically yesterday, moved out to 180.8bp from 156bp.

Market sentiment improved towards Franco-Dutch commercial property company Unibail-Rodamco - CDSs on the firm tightened to 462.5bp from 483.3bp.

Elsewhere, Japanese electronics giants Panasonic and Sony saw spreads move in by five basis points each to 115bp and 120bp respectively, and CDSs referencing French auto-maker Renault moved in to 328.3bp from 338.5bp.

See also: CDSs widen on Spanish banks