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Hungary debt insurance costs surge on Greece worries

Default insurance costs on Hungary's sovereign debt followed those of both core and periphery eurozone countries to a multi-week high on Wednesday in London, reflecting renewed market fears over Greece's future in the monetary union after the Greek elections last weekend had produced an inconclusive outcome. According to CMA, a major CDS market data monitor in London, Hungary's five-year credit default swaps (CDS) traded around 518bps late in the session after closing the previous day at 508.5bps. Wednesday's CDS pricings on Hungary's sovereign debt compare with spreads below 500bps seen over the past couple of weeks in London. A CDS contract valued at 518bps means that the cost to insure every €10 million worth of bond exposure against default is €518,000 a year for the benchmark five-year horizon, a €10,000 rise in a single trading day.