Middle Eastern debt costs rise sharply

Gavan Nolan of Markit believes that that the latest scenes from Cairo are making traders fear regional contagion The cost of insuring Egyptian government debt increased sharply today, in a sign that investors have grown more nervous about the ongoing crisis. Other Middle Eastern government debt also came under pressure, as the protests against president Hosni Mubarak entered a seventh day . The five-year Egypt credit default swap rose by 17 basis points to 445bp, according to data from Markit. This is close to its highest level since April 2009. This means it costs £445,000 to insure £10m of Egyptian debt. In comparison, the UK five-year credit default swap trades around 60bs, while Ireland’s CDS hit 600bp recently. Elsewhere, the Saudi Arabia CDS jumped by 29bp to 120bp, Bahrain rose by 28bp to 220bp, and Qatar gained 17bp to 110bp. The only faller in the region was Israel, down 1bp at 145bp. Gavan Nolan of Markit believes that that the latest scenes from Cairo are making traders more risk-averse. “Fears of contagion are increasing, as investors wonder if the events in Egypt will spread across the Arabian peninsula,” said Nolan. The Egyptian stock exchange was closed today, and officials said it will remain shuttomorrow too. Most banks in the country are also shut. The crisis has weighed on stock markets across the world , with Japan’s Nikkei falling overnight and the FTSE 100 down almost 1% in early trading today, although it clawed back some losses. By midday the FTSE 100 was 20 points lower at 5860. Market turmoil Economics Global economy Egypt Middle East guardian.co.uk

Posted by on January 31, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry