Five-year credit default swaps for State Bank of India have jumped 45 basis points from their close Friday, to 351 basis points, the highest level in 14 months, according to Markit Group. The increase comes as India's rupee hits a record low against the U.S. dollar. "The CDS move is understandable," Societe Generale analyst Guillaume Salomon said. "When the currency is under pressure, it raises the question of how they will finance the deficit, hence the reason CDS is widening."
Anti-government protests have pushed the cost of insuring Turkish debt to the highest level since November. Five-year credit default swaps are up 7 basis points, to 148, according to Markit Group. Although Deputy Prime Minister Bulent Arinc's apology for police violence has eased tension, peaceful demonstration can still harm the business community, one expert says.
Five-year credit default swaps covering French debt have risen to a level not seen since January, according to Markit Group. The increase comes as investor sentiment is weighed down by election concerns. "Both candidates are taking an increasingly isolationist view, and investors may well be looking to hedge some of that risk in the CDS market," said ICAP analyst Chris Clark. "Unless the tone of the contest shows some sign of change, we may well see continued widening in spread levels."
Credit default swaps covering the debt of Banco Santander have jumped 52% since the beginning of March, while CDS on Banco Bilbao Vizcaya Argentaria are up 54%. Markit Group analyst Gavan Nolan said the increase is largely because of the European Central Bank's program for three-year loans. "They've actually tightened the relationship between the banks and the sovereign," Nolan said. "So the banks have been buying sovereign debt, and that has made their fortunes even more intertwined than they have previously." Meanwhile, Spain's five-year CDS are getting close to a record high of 487 basis points, according to Markit.