March 16, 2020 / 11:21 AM / 24 days ago

Debt insurance costs for risky European debt hit new eight-year high

LONDON (Reuters) - Debt insurance costs for low-grade European debt rose sharply on Monday and hit a new eight-year high as emergency measures taken by global central banks spooked markets, sending riskier assets tumbling.

Despite the U.S. Federal Reserve’s second emergency rate cut in less than two weeks and coordinated central bank action to cut pricing, European stocks and riskier bonds were hard hit by panic around the impact of coronavirus.

The iTraxx Europe crossover index of credit default swaps (CDS), which measures the cost of insuring exposure to a basket of sub-investment grade European companies, jumped as high as 613 bps, according to Refinitiv Eikon, the highest level since 2012. It was last up over 80 bps on the day. ITEXO5Y=MG

Similarly, the iTraxx Europe subordinated financials index jumped to 322 bps, the highest level since 2013. It was last up around 50 bps. ITEFS5Y=MG

Reporting by Yoruk Bahceli, Editing by Abhinav Ramnarayan

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