Sovereign, corporate and bank CDS spike sharply on coronavirus rout

LONDON (Reuters) – The cost of insuring debt issued by European sovereigns, major global banks and low-grade European companies against default rose sharply on Wednesday after fresh fears over the fallout from the coronavirus spread and shutdowns roiled markets.

Among European sovereigns, non-core governments saw the steepest increases with five-year credit default swaps (CDS) for Portugal jumping 19 basis points (bps) to 167 bps – the highest since the summer of 2017, while Spain added 18 bps to hit a 5-1/2 year high of 166 bps, data from IHS Markit showed.

Banks also felt the heat with CDS for U.S. lenders Morgan Stanley jumping 22 bps to 174 bps, the highest since summer 2013. JPMorgan Chase and BofA both added 19 bps to fresh multi-year highs.

The Markit iTraxx Europe crossover CDS index , which measures the cost of insuring exposure to a basket of sub-investment grade European companies, extended gains to trade 87 bps higher at 697 bps – a fresh near-eight year high.

(Reporting by Karin Strohecker; Editing by Dhara Ranasinghe)