Wednesday, September 10, 2008

WaMu's CDS Spreads Surge to Record High; Stock Plunging

The cost of protecting Washington Mutual's debt with credit default swaps has surged to a record high, Reuters reports.

Five-year credit default swaps on Washington Mutual traded at 40 percent upfront, plus 500 basis points annually, up from 32 percent upfront plus 500 basis points a year on Tuesday, according to data from Phoenix Partners Group. That means it now costs $4 million on an upfront basis plus $500,000 a year to protect $10 million of debt for five years.

Wamu stock is currently down another 20.61%, trading at $2.61 per share.

-EPJ Newsdesk

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