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Greek CDS spreads jump on restructuring worries
By William L. Watts
LONDON (MarketWatch) -- The cost of insuring Greek government debt against default soared to a record level Thursday, after German Finance Minister Wolfgang Schaeuble was quoted as telling the German newspaper Die Welt that Greece may need to take "further measures" if a June audit by the European Commission and the European Central Bank shows the nation's debt burden isn't sustainable. The spread on five-year Greek credit default swaps, or CDS, widened 43 basis points to trade at 1,090 basis points after hitting more than 1,100 earlier Thursday morning, according to data provider Markit. That means it would now cost $1.09 million annually to insure $10 million of Greek sovereign debt against default for five years, up from $1.047 million on Wednesday. The remarks, implying a potential restructuring, appeared to be the trigger, said Gavan Nolan, director of credit research at Markit. Schaeuble said any restructuring before 2013 must be voluntary because current euro-zone rescue rules don't allow for writedowns.
By William L. Watts
LONDON (MarketWatch) -- The cost of insuring Greek government debt against default soared to a record level Thursday, after German Finance Minister Wolfgang Schaeuble was quoted as telling the German newspaper Die Welt that Greece may need to take "further measures" if a June audit by the European Commission and the European Central Bank shows the nation's debt burden isn't sustainable. The spread on five-year Greek credit default swaps, or CDS, widened 43 basis points to trade at 1,090 basis points after hitting more than 1,100 earlier Thursday morning, according to data provider Markit. That means it would now cost $1.09 million annually to insure $10 million of Greek sovereign debt against default for five years, up from $1.047 million on Wednesday. The remarks, implying a potential restructuring, appeared to be the trigger, said Gavan Nolan, director of credit research at Markit. Schaeuble said any restructuring before 2013 must be voluntary because current euro-zone rescue rules don't allow for writedowns.