As Hungary’s borrowing costs have skyrocketed and the forint depreciated to a new record low of 320 versus the euro, the country’s cost of insuring against default with credit-default swaps rose to a record high 660 basis points from around 650 bps on 3 January.
11:18 - CDS keeps on truckin’
Hungary’s 5-yr CDS spread rose further over the past one hour. According to Markit data released by Reuters the indicator went up 39 basis points to 686 bps.
The JPMorgan EMBI Global emerging sovereign debt index also rose 39 bps to an all-time high of 677 bps, which indicates a marked sellers’ pressure on the FX bond market too. The yield on Hungary’s USD-denominated bond expiring in 2020 is around 9.57%. At this level, with a new USD bond issuance Hungary’s debt path would be unsustainable in the medium and long term.
10:18
Hungary’s 5-yr CDS spread went up to 660 bps on Wednesday morning from yesterday’s close at around 650, way higher than at the peak of the rising streak in March 2009.
The cost of insuring against default with CDS is on the rise in concert with yield jumps and the forint’s depreciation, because investors are getting increasingly concerned about Hungary’s chances of securing a bailout form the IMF/EU. And it’s not just the when but the if. In the chart below you find CDS data by Datastream, which shows systematically lower figures than data series by Markit and CMA, which are watched more closely by the market.
Charting is displayed using TradingView's technology, a platform, where you can build advanced charts,
spot upcoming trends in the stock screener, and find inspiration in multiple trading ideas
