Default insurance costs on Hungary’s sovereign debt on Wednesday dropped to the lowest level since the end of January as the forint strengthened. According to S&P Capital IQ’s CMA, a major CDS market data monitor in London, Hungary’s benchmark five-year credit default swaps (CDS) traded around 286bp late on Wednesday compared to spreads of around 395bp early in April. A CDS contract valued at 286bp means that the cost to insure every EUR 10 million worth of sovereign FX bond exposure against default is now around EUR 286,000 a year for the benchmark five-year maturity.
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