Default Risk For Major U.S. Banks And Brokers

Includes: BAC, C, GS, JPM, MS, WFC
by: Bespoke Investment Group

Things have settled down over the last few trading days, but the markets have been a little shaky since the end of May. Below we take a look at how default risk has been impacted recently for the six largest U.S. banks and brokers. In the charts below, we highlight the prices of five-year credit default swaps since the start of 2011. The price for each firm is in basis points, but basically the number shown is the price per year in dollars that it costs to insure $10,000 of the firm's debt from default for the next five years.

As shown below, default risk has seen a small uptick since the start of June, but prices are still very low relative to where they've been trading over the past couple of years. Wells Fargo (NYSE:WFC) has the lowest default risk of the bunch at just 66 basis points, followed by JPMorgan (NYSE:JPM) at 79 bps and Citigroup (NYSE:C) at 95 bps. Bank of America (NYSE:BAC) is at just over 100 bps, while Goldman Sachs (NYSE:GS) is at 119 bps and Morgan Stanley (NYSE:MS) is at 133 bps.