Price of insuring Hungarian debt falls

MNB

The cost of insuring Hungarian state debt sank further on markets in London on Wednesday amid growing market optimism concerning the enhancement of the eurozone's EFSF rescue fund.

CMA DataVision said that the benchmark 5-year mid-spread of Hungary's credit default swaps contracts (CDS) was around 525bp after closing at 540.6bp in Tuesday, MTI's London correspondent reported.

A week ago the mid-spread was around 573bp, a two-year high.  Hungary's CDS mid-spread was around 460bp at the beginning of September and around 255bp at the beginning of the summer.

Hungary's CDS mid-spread peaked at 630bp in March 2009. A CDS contract valued at 525bp means that the cost to insure every €10 million worth of bond exposure against default is €525,000 a year for the benchmark five-year horizon.

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