The cost of insuring Hungary’s sovereign debt against default fell under 300bp on markets in London on Friday, reaching a new low for the year as optimism was boosted by the government’s fiscal adjustment programme unveiled a week earlier and market expectations for an agreement with the IMF/EU. According to Markit, a big CDS market data monitor in London, Hungary’s five-year credit default swaps (CDS) fell 23bp to around 298bp on Friday, down 70bp from a week earlier and 85bp from a month earlier. A CDS contract valued at 298bp means that the cost to insure every EUR 10m worth of bond exposure against default is €298,000 a year for the benchmark five-year horizon. Hungary’s CDS spreads were over 750bp in the first week of this year.
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