Greek/German yield spread widens, Greek CDS rises

LONDON Mon Feb 8, 2010 6:45am EST

LONDON Feb 8 (Reuters) - The premium investors demand to hold Greek sovereign debt over core German paper briefly rose to a session high on Monday as a Greek union said it could call a further strike [ID:nATH005178].

The yield spread between 10-year Greek government bonds and benchmark German Bunds GR10YT=RREU10YT=RR spiked to as much as 365 basis points, up from Friday's settlement close of 350 bps, before returning to stand little changed on the day.

One trader said the widening was led by moves in the credit default swap market.

The cost of insuring against a Greek sovereign default was at 407,000 euros per 10 million euros of exposure, according to 5-year CDS prices from CMA DataVision, in line with levels seen at the New York close and having reversed an earlier tightening.

The equivalent costs for Portugal and Spain also continued to edge higher to 236,500 euros and 165,000 euros respectively from closing levels of 226,900 and 166,500 euros.

(Reporting by William James)