The cost of insuring European sovereign and corporate debt against default using credit default swaps jumped higher in early trading Friday, as the intensifying euro-zone debt crisis and fears of a global slowdown hit financial markets around the world. The SovX Western Europe index, which investors can use to buy or sell default protection on a basket of 15 sovereign borrowers, was 12.5 basis points wider at 305/311 basis points, according to index owner Markit. CDS function like a default insurance contract for debt. A widening of one basis point in a five-year CDS spread equates to a $1,000 increase in the annual cost of protecting $10 million of debt for five years. The iTraxx Crossover index of 40 mostly sub-investment grade corporate borrowers was 39 basis points wider at 549/553. And the Europe index of 125 investment-grade borrowers was six basis points wider at 137/138. The rise in default-insurance costs comes as stock markets around the world tumble on euro-zone debt fears and worries about a slowing world economy, even after the European Central Bank Thursday bought sovereign bonds for the first time since March. “Today’s U.S. nonfarm payroll figures will be pivotal for market sentiment,” said Christian Weber, strategist at UniCredit Bank.
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Friday, August 5, 2011
The cost of insuring European sovereign and corporate debt against default using credit default swaps jumped higher in early trading Friday, as the intensifying euro-zone debt crisis and fears of a global slowdown hit financial markets around the world. The SovX Western Europe index, which investors can use to buy or sell default protection on a basket of 15 sovereign borrowers, was 12.5 basis points wider at 305/311 basis points, according to index owner Markit. CDS function like a default insurance contract for debt. A widening of one basis point in a five-year CDS spread equates to a $1,000 increase in the annual cost of protecting $10 million of debt for five years. The iTraxx Crossover index of 40 mostly sub-investment grade corporate borrowers was 39 basis points wider at 549/553. And the Europe index of 125 investment-grade borrowers was six basis points wider at 137/138. The rise in default-insurance costs comes as stock markets around the world tumble on euro-zone debt fears and worries about a slowing world economy, even after the European Central Bank Thursday bought sovereign bonds for the first time since March. “Today’s U.S. nonfarm payroll figures will be pivotal for market sentiment,” said Christian Weber, strategist at UniCredit Bank.
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Bursa de la Bucuresti inregistra pierderi de peste 4% in debutul sedintei de vineri
de Dragos Comache HotNews.ro
Vineri, 5 august 2011, 10:17 Economie | Burse
Bursa de Valori Bucuresti (BVB) a deschis in scadere puternica sesiunea de tranzactionare de vineri, pierderile indicilor fiind de peste 4%, investitorii reactionand la scaderea burselor internationale. Bursele europene au continuat sa inregistreze pierderi importante si in debutul sedintei de vineri, pe fondul problemelor din Italia si Spania si a redresarii economice lente din Statele Unite.
Dupa primele minute de tranzactionare, indicele compozit al pietei, BET-C, a scadea cu 4,27%, la 2.997,92 puncte, iar indicele BET, al celor mai lichide titluri listate, pierdea 4,68%, la 4.889,57 puncte.
BET-FI, indicele societatilor de investitii financiare, a ajuns la valoarea de 19.828,35 puncte, cu 5,90% mai putin decat la finele sedintei de joi.
Indicele BET-XT, al celor mai lichide 25 de companii tranzactionate, cobora cu 5,09%, pana la 451,26 puncte, iar BET-NG, care masoara evolutia companiilor energetice si de utilitati, se deprecia cu 5,76%, pana la valoarea de 677,45 puncte.
Stephen Hester, chief executive of Royal Bank of Scotland, urged markets to stay calm in the face of turbulence as the bailed-out bank slumped to a £794m first-half loss.
RBS moved into the black a year ago, when it reported £1.1bn of pretax profits, but it has now been dented by a £733m hit on Greek bonds and an £850m provision for payment protection insurance compensation.
On a day when the FTSE 100 opened 138 points down, Hester said it was important to stay composed despite the turmoil on the markets.
"We should be calm but we need to be purposeful," he said. "We are at a serious point in the markets and serious point in the growth cycle."
Taxpayers have an 83% stake in RBS after £45bn was used to prop up the bank. A year ago, the shares were trading at 51.1p, giving the taxpayer a £2.7bn paper profit, but the turmoil in the financial markets has resulted in the shares showing a loss of more than £18bn for the taxpayer.
In early trading on Friday, shares were at a two-year low of 26p, half the 50.1p price at which taxpayers bought their stake in the bank. They were the second biggest fallers on the FTSE, down 10%.
"My mood swings don't tend to be very heavily linked to the share price," Hester said as he conceded that the slump in the shares made it difficult for the government to sell its stake.
Hester was parachuted into RBS during the October 2008 banking crisis and has since revamped the top management team as part of a five-year turnaround programme.
He is opposed to any proposals by the independent commission on banking (ICB), chaired by Sir John Vickers, which might require banks to ringfence their high street banking operations from their "casino" investment banking businesses.
"RBS continues to engage with the commission and with regulators on the commission's proposals for ringfencing certain activities," Hester said.
"In RBS's view, ringfencing is unlikely to meet the tests set out in the commission's terms of reference. We believe it might actually result in increased risk whilst costs to banks and the broader economy could be significant. The case for going further than the international reform under way is unproven. The economic and market backdrop also suggest that further change may be ill-timed," he said.
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