Price of insuring Hungarian debt climbs as risk aversion grows

MNB

The cost of insuring Hungarian state debt rose on markets in London on Thursday to highs not seen since the depths of the crisis as risk aversion grew on global markets.

CMA DataVision said that the benchmark 5-year mid-spread of Hungary's credit default swaps contracts (CDS) was around 525bp in trade in London on Thursday, up from 487.7bp late Wednesday.

Hungary's CDS mid-spread was around 460bp one week ago and around 255bp at the beginning of the summer.

A CDS contract valued at 525bp means that the cost to insure every €10m worth of bond exposure against default is €525,000 a year for the benchmark five-year horizon.

Hungary's CDS mid-spread peaked at 630bp in March 2009.

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