May 29, 2018 / 10:46 AM / 20 days ago

Italy, other euro zone sovereign and bank CDS surge

LONDON, May 29 (Reuters) - The cost of insuring exposure to credit issued by euro zone periphery sovereigns and banks across the bloc soared on Tuesday amid fears that political turmoil in Italy could spark wider euro zone troubles.

Spanish five year credit default swaps (CDS) jumped by 20 basis points (bps) from Monday’s close to 95 bps - the highest level in 22 months, data from IHS Markit showed. Ireland CDS hit their highest in eight months at 33 bps.

CDS of euro zone banks - which have major exposure to Italian sovereign holdings - also rose sharply. Readings on Italian banks UniCredit and Intesa Sanpaolo both hit 156 bps - rising 34 bps and 32 bps from Monday respectively - to their highest in more than a year.

According to figures published by Citi on Monday, the top six Italian banks have a 166.6 billion euros exposure to Italian sovereign debt.

Major French banks’ BNP Paribas, Credit Agricole and Societe Generale 5-year CDS also rose sharply, jumping 50 bps or more on the day. BNP Paribas hit 93 bps - its highest since April 2017. (Reporting by Karin Strohecker, editing by Abhinav Ramnarayan)

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