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Hungary CDS prices tighten after G20 IMF money pledge

  Default insurance costs for Hungary’s outstanding sovereign debt tightened significantly in Friday’s trading in London after the G20 group of major industrialized and developing countries pledged hundreds of billions of dollars in new IMF funds for emerging markets, London-based market analysts said.

Hungary’s five-year credit default swaps (CDS) fell to 464.2bps after closing at 497.2bps on Thursday and at 540bps the previous day, CMA DataVision, a leading debt market data monitor told Econews in London.

If a CDS contract is valued at 464.2bps, it means it costs $464,200 per year to insure a $10,000,000 bond exposure against default.

Hungary’s CDS pricing peaked at 630bps early last month and, with occasional volatilities, has been steadily tightening since, even with two major credit rating agencies having downgraded Hungary’s sovereign credit earlier this week.