European CDS Bloodbath Increasingly Threatens Core

Tyler Durden's picture

Perhaps if CNBC could pretend for a second that there was more to the economy than (disappointing) Black Friday channel checks it would realize that there is a complete massacre in European CDS spreads. At last check the Iberian Peninsula was the target of a tactical CDS nuke, with Spanish and Portuguese CDS widening by 23 and 36 bps respecitvely, to 354 and 538 bps. The second tier of bailoutees is also expected: Belgium and Italy, both of which are wider by just over 16 bps, hitting 178 and 232 bps. And lastly, even the core is no longer safe, as Austria and Germany were both about 5% wider to 87 and 50 bps each. Bases are widening as cash bonds are lagging today. The reason for the move, which should be completely expected to all Zero Hedge readers, is as Market News reports, that "a growing school of thought believes that - without
major debt restructuring for Ireland - the current solution is just
buying time. Many traders also fear that the interest rate applied
to the new cash of 5.83% is unmanageable for the Irish economy." In other words start your Portugal, Spain, Belgium, Austria bailout countdown timer.

Some CDS charts:

G8 countries ex Canada and Russia:

Liquid G8 and Western Europe

source: citi