September 20, 2011 / 8:30 AM / in 8 years

EURO GOVT-Italian CDS prices rise after downgrade

LONDON, Sept 20 (Reuters) - The cost of insuring against an Italian default rose on Tuesday after credit rating agency Standard & Poor’s surprised markets by being the first to cut the country’s credit rating.

S&P lowered Italy’s long-term credit rating one notch to A, three notches below Moody’s current rating.

Italian 5-year credit default swaps rose 27 basis points to 515 bps, according to monitor Markit. The price means it costs 515,000 euros to insure 10 million euros of debt against default.

Other euro zone sovereign CDS prices also rose, including France and Germany which were both 4 basis points higher on the day. (Reporting by Kirsten Donovan)

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