Ecco qui, il passo breve
...
Bank Default Swaps at Highest on Record Amid Writedown Concern
By Steve Rothwell
Nov. 21 (Bloomberg) -- Credit-default swaps on bank debt jumped to a record on concern lenders will add to more than $50 billion of writedowns worldwide on securities linked to subprime mortgages.
Contracts on the Markit iTraxx Financial Index, a benchmark for the cost of protecting the bonds of banks and insurers against default, rose 5 basis points to 62 basis points, the highest since its start in 2004. Contracts on Barclays Plc, the U.K.'s third-biggest bank, rose 6 basis points to 70 basis points, and Swiss Reinsurance Co., the world's biggest reinsurer, climbed 10 basis points to 61 basis points.
Mitsubishi UFJ Financial Group Inc., Japan's biggest publicly traded bank, posted a 63 percent drop in second-quarter profit on losses linked to credit cards and U.S. mortgages. U.S. mortgage finance company Freddie Mac said yesterday it may need to raise as much as $6 billion to boost capital because of the worst housing slump in at least 16 years.
``Everything is signaling that the market may switch to panic mode,'' Philip Gisdakis, a credit analyst at UniCredit SpA in Munich, said in an interview today. ``The news flow is so bad and there is no relief in sight.''
The Bloomberg Europe Banks and Financial Services stock index fell 2.9 percent today to a two-year low of 231.88. The decline is the steepest in one day since August.
Credit-default swaps on banks and insurers are as expensive as for debt from European companies with investment-grade ratings. Contracts on the Markit iTraxx Europe Index of 125 companies rose 5 basis points to 62 basis points. The indexes increase when perceptions of credit quality worsen.
Barclays, Credit Agricole
Contracts on London-based Barclays, which last week reported writedowns of about $2.7 billion, have risen tenfold since June. Credit-default swaps on Credit Agricole SA, France's second- biggest bank, rose 5 basis points to 55 basis points.
The cost for banks to borrow in dollars for three months climbed to the highest in more than three weeks. The London interbank offered rate rose 2 basis points to 5 percent, the fifth daily increase, the British Bankers Association said today.
``Libor rates are genuinely worrying,'' said Niall O'Leary, head of credit portfolio management at Bank of Ireland Asset Management in Dublin, with 8 billion euros of fixed income. ``Liquidity in credit markets is appalling.''
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
The cost of contracts on the Markit iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 15 basis points to 401 basis points, the highest since August, according to Deutsche Bank.
A basis point on a credit-default swap contract protecting 10 million euros ($14.8 million) of debt for five years is equivalent to 1,000 euros a year.
