May 3, 2010 / 9:42 PM / 7 years ago

UPDATE 1-CDS show Goldman now equal risk to Morgan Stanley

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NEW YORK, May 3 (Reuters) - Goldman Sachs' (GS.N) credit risks are now comparable to those of Morgan Stanley (MS.N) for the first time since October 2007 based on prices of credit default swaps insuring the banks' debt, Markit data showed on Monday.

Morgan Stanley's credit default swaps had traded at a higher cost than Goldman's since 2007, indicating market perceptions that Goldman had less credit risk than Morgan Stanley.

Credit default swaps on Goldman and Morgan Stanley both traded at around 162 basis points on Monday, or $162,000 per year for five years to insure $10 million in debt, according to Markit Intraday.

The difference between CDS spreads on Goldman and Morgan Stanley has narrowed from around 30 basis points in March, and from more than 100 basis points in April 2009, Markit data show.

Goldman's debt and CDS have come under pressure since the bank on April 16 was charged with fraud by the Securities and Exchange Commission over its marketing of a subprime mortgage product.

CDS protection on Goldman's debt has jumped in cost from around 90 basis points before the SEC's statement.

Goldman on Monday, in a rare move, disclosed information about the many lawsuits and shareholder challenges facing the bank. For details, see [ID:nN03221187] (Reporting by Karen Brettell; Editing by Leslie Adler)

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