Hungary default insurance costs fall on improved outlook for IMF-EU talks

History

The cost of insuring Hungary's sovereign debt against default fell sharply on markets in London on Wednesday on an improved outlook for talks on precautionary financial assistance the country is seeking from the International Monetary Fund and the European Union.

According to CMA DataVision, a major CDS market data monitor in London, Hungary's five-year credit default swaps (CDS) traded around 559bp on Wednesday, falling from 570.3bp late Tuesday.

The price of Hungary's five-year CDSs fell from around 600bp early in the week after Prime Minister Viktor Orbán said on Tuesday that obstacles to talks with the IMF and EU had been "essentially removed" after a meeting with European Commission President Jose Manuel Barroso in Brussels on Tuesday.

A CDS contract valued at 559bp means that the cost to insure every €10 million worth of bond exposure against default is €559,000 a year for the benchmark five-year horizon.

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