Lehman debt protection costs drop on WSJ report

NEW YORK (Reuters) - The cost to insure the debt of Lehman Brothers dropped after the Wall Street Journal reported that Bank of America Corp is in buyout talks with the bank, citing sources.

Lehman's credit default swaps tightened to 550 basis points, or $550,000 per year for five years to insure $10 million in debt, according to Phoenix Partners Group. The swaps had earlier traded at 650 basis points, and this morning rose as high as 800 basis points, traders said.

(Reporting by Karen Brettell;)