October 15, 2008 / 5:27 PM / 12 years ago

Morgan Stanley, Goldman debt protection costs rise

NEW YORK, Oct 15 (Reuters) - Credit default swaps on U.S. banks weakened on Wednesday, reversing some gains made earlier in the week, as concerns about a global recession weighed on the equity and credit markets.

Morgan Stanley (MS.N) was among the weaker performers, with its debt protection costs rising 50 basis points to 480 basis points, or $480,000 per year for five years to insure $10 million in debt, according to Phoenix Partners Group.

Goldman Sachs’ (GS.N) credit default swaps also weakened 40 basis points to 240 basis points, while Merrill Lynch’s MER.N swaps widened 20 basis points to 190 basis points, Phoenix said.

Federal Reserve Chairman Ben Bernanke said on Wednesday the turmoil in credit markets poses a “significant threat” to an already slowing U.S. economy. For details, see [ID:nN15308065]

The benchmark U.S. investment grade credit derivative index widened almost 6 percent on Wednesday to around 187 basis points, according to Markit Intraday. (Reporting by Karen Brettell; Editing by Leslie Adler)

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