Treasury credit default swaps hit record: CMA

NEW YORK (Reuters) - The cost of protecting U.S. Treasury debt with credit default swaps hit record highs on Tuesday amid concerns about the cost of a government bailout of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N).

Five-year credit default swaps for Treasury debt traded at an all-time high of 17.5 basis points, or $17,500 a year to insure $10 million of debt, up from 15.5 basis points on Friday before Sunday's bailout announcement, according to data from CMA DataVision.

Treasury's 10-year credit default swaps traded at a record 21.4 basis points on Tuesday, up from 18.5 basis points Friday.

The cost to the U.S. government from taking on liabilities of the two companies was said to be behind the rise, according to Lou Brien, a strategist with DRW Trading Group in Chicago.

The Treasury Department committed to provide up to $200 billion to buy shares in the struggling companies as part of a takeover aimed at supporting the U.S. housing market and warding off more financial market turbulence.

The takeover could mean more government borrowing and federal exposure to risky mortgage assets that have been battered by the housing slump, analysts said.

(Reporting by Dena Aubin; Editing by James Dalgleish)