Greece deal pushes Hungary CDS spread below 300bps

MNB

Default insurance spreads on Hungary's sovereign debt have tightened to sub-300bps levels for the first time in several weeks on the back of an improving risk perception after eurozone leaders reached what market participants consider as a last-minute but comprehensive policy response to the Greek debt crisis during a summit in Brussels.

According to figures from CMA DataVision, a major CDS market data provider in London, the mid-spread of Hungary's five-year credit default swaps (CDS) was down to around 283bps in Friday's trading, tightening from levels above 310bps earlier this week.

A CDS contract valued at 283bps means that the cost to insure every €10 million worth of bond exposure against default is €283,000 a year for the benchmark five-year horizon.

This compares to Greece's CDS spreads which, although sharply lower after the eurozone deal, were still priced well above 1,600bps on Friday, which means that taking out insurance against a Greek default event currently costs more than €1.6 million for every €10 million of Greek sovereign debt.

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