June 13, 2011
The cost of insuring Greek sovereign debt hit a new lifetime high on Monday as fears over its financial stability, and the health of the wider economy, continued to unsettle investors.
It now costs €1.6m (£1.4m) to insure €10m of Greek debt, a record amount, after the five-year Greek credit default swap jumped by 58 basis points to 1,600bp. The prices of insuring Ireland and Portugal's debt also hit new all-time highs, according to data from Markit.
Analysts said the financial markets remained nervous of a Greek default, as negotiations continue over a second rescue package for Athens.
"There's no special reason driving the CDS prices to these new highs," said Gavan Nolan, director of credit research at Markit. "It's the general uncertainty over the situation in Greece."
City traders also reported a "flight to safety" at the start of a busy week for economic data. The latest US retail sales, inflation and housing data will all be scrutinised for signs that the recovery in the world's biggest economy is faltering.
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