Default Risk for Key Financials

Below we highlight current credit default swap prices for 13 global financial firms.  The prices indicate the cost per year to insure $10,000 of bonds for five years.  These prices were much, much higher a few weeks ago, so it's good to see them come down, but they still remain elevated. 

Morgan Stanley (MS) and Goldman (GS) currently have the highest CDS prices, followed by Merrill (MER) and Citigroup (C).  As of yesterday's close, Wells Fargo (WFC) and HSBC (HBC) were the only two financials of the group below to have CDS prices below 100.

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Comments

[Boubou:]

This is really useful info which I personally don't know where to access.
Thanks.

2008 Nov 06 01:12 PM

[James Wilson:]

C is well below the risk factor for the debt they hold now. Leveraged against loss and good cash flow.

2008 Nov 06 02:11 PM

[jack kreg:]

I just realized today that taking interest rates to near zero about the globe has and will not put a bottom in the economic downturn, much less lead to recovery.

What will is something new for the global economy, tax cuts for all workers and employers. Reagan/Thatchers genius of the 80's worked for them, they learned from JFK who also used tax cuts to spring the economy back to life.

Coordinated tax cuts in all global economy's; UK, USA, EU and Asia!!

2008 Nov 06 04:20 PM

[phat cat:]

These CDS levels are only meaningful if the counterparty who sells it to you are solvent. Just some other levels, UK is at 45, State of Texas is at 78, State of New Jersey is at 135. China is at 119 (they are the largest US treasury holder btw). I saw even US is trading at 30. Who ever is looking to buy CDS on US Treasury is completely nuts, who's guaranteeing the seller?!! While this whole system is breaking down, a lot of things are getting mis-priced. So I really wouldn't pay too much attention to these numbers.

2008 Nov 07 01:56 AM

[NOWHEREMAN:]

Lower interest rates help countries with low savings rates. From interest payments on all types of mortgages or Home equity lines to all types of credit debt, lower interest rates will help the Real Mainstreet, the people. Wallstreet is being helped by the Government, ie corporations of all stripes. The people losing their jobs may be forced into missing a payment or two on any of the above types of debt, because of the Conspiracy ongoing in the Financial Community (sharing debt data), the individual who loses a job will be subject to usurious rates. Either change the system or lower the discount rate not the fed funds rate which is not used in the calculation of loans.

Changing the system would be ideal but there is no interest in helping Mainstreet. So lower the discount rate. Keep the fed funds rate unchanged, it is currently useless to all.

2008 Nov 07 01:20 PM