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Hungary default insurance costs rise near record high

Default insurance costs on Hungary’s sovereign debt rose near record highs on markets in London on Tuesday.

According to CMA DataVision, a major CDS market data monitor in London, Hungary’s five-year credit default swaps (CDS) traded around 645bp late on Tuesday, the first trading day of the year in the UK, rising from 634.9bp at the previous close.

A CDS contract valued at 645bp means that the cost to insure every EUR 10m worth of bond exposure against default is EUR 645,000 a year for the benchmark five-year horizon.

Hungarian CDS contracts last traded near the 650bp record at the end of November.

City analysts said Hungary would probably have to amend its contentious Central Bank Act if the IMF and EU are to continue talks on financial assistance.