Bank Debt Swaps Exceed Corporate Insurance by Most Since Lehman

[Joanne98]

Feb. 2 (Bloomberg) -- The cost to protect against losses on European bank bonds jumped above insurance on company debt by the most since the collapse of Lehman Brothers Holdings Inc. amid concern that government budget woes will spread to lenders.

The Markit iTraxx Financial Index of credit-default swaps exceeded the investment-grade Markit iTraxx Europe Index by 9.25 basis points, according to JPMorgan Chase & Co. That’s the most since September 2008, CMA DataVision prices show.

Greece and Portugal’s struggles to close budget deficits are triggering concern European Union countries will be less able to provide support for banks. Governments worldwide pumped trillions of dollars into the financial system to stimulate lending when credit markets seized up after the collapse of New York-based Lehman Brothers.

“The financial sector is still dependent on sovereign support,” said Tim Brunne, a Munich-based strategist at UniCredit SpA. “If sovereigns are impacted negatively from budget deficits, that could spill over to financials. The link is weaker for companies.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWu6fxqwwg_U&pos=7

[thunder rising]

1. OMG, give them more money!! This time Obama WILL own it.

[westerebus]

2. 15 September 2008 Lehman files for bankruptcy.

And the walls come tumbling down...

The que for a two peat?

Hi. :-)

[dkf]

3. Is this the same crop of European banks we bailed out with aig?

My friend said she heard the European banks CDSs we paid out on for aig were Goldman securities? Is that for real? If we didn't bail out aig would the European banks have had recourse from gs? We sure do need to get to the bottom of that mess.

[westerebus]

4. Same banks.

Everybody and their brother's second cousin has a slice of this pie in their accounts.