Thursday, January 17, 2008
MBIA CDS widens
--Credit-default swaps tied to Armonk, New York-based MBIA'sbonds soared 15.5 percentage points to 31.5 percent upfront and 5percent a year, according to broker Phoenix Partners Group. Thatmeans it would cost $3.15 million initially and $500,000 a yearto protect $10 million in MBIA bonds from default for five years. --The price implies that traders are pricing in a 78 percentchance that MBIA will default in the next five years, accordingto a JPMorgan Chase & Co. valuation model. Contracts on New York-based Ambac, the second-biggestinsurer, rose 15 percentage points to 30 percent upfront and 5percent a year, prices from CMA Datavision in London show. Ambac's implied chance of default is also 78 percent,according to the JPMorgan data.