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Reply #85: Wowie Zowie! GM debt protection costs hit record 47.5 percent upfront [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-04-08 09:57 AM
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85. Wowie Zowie! GM debt protection costs hit record 47.5 percent upfront

NEW YORK (Reuters) - The cost of insuring the debt of General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) against default hit a record high on Monday in the wake of a $15.5 billion quarterly loss reported by the automaker on Friday.

GM's five-year credit default swaps rose to 47.5 percent of the sum insured as an upfront payment from 46.5 percent at Friday's close, plus 500 basis points in annual payments, according to Phoenix Partners Group. This means it would cost $4.75 million to insure $10 million in debt for five years, plus $500,000 a year.

GM's benchmark bonds with an 8.375 percent coupon due in 2033 were unchanged at 47.5 cents on the dollar, according to MarketAxess. They had dipped to an all-time low of 46 cents on Friday after GM reported its second-quarter loss.

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