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Banking risk increases... says CDS spreads

Discussion in 'The Economy' started by pcj821, 7th May, 2010.

  1. pcj821

    pcj821 Member

    Joined:
    18th Nov, 2008
    Posts:
    17
    Location:
    Newcastle, NSW
    I found this article today

    Default Fears Soar For Australian Financials

    Apparently (according to wiki) when CDS spreads widen it is because that company is seen to be at a greater risk of default.

    While each bank has had a large increase in its spread I'm guessing its only because of their recent price decrease in the share market and therefore probably doesn't mean that much. However because I know absolutely nothing about how CDS spreads work, I would like to hear some other peoples opinions on what they think it means.

    for example, is this start of our banking sectors previously hidden vulnerabilities becoming exposed? or is it just a bit of fear mongering?

    Cheers,
    Paul
     
  2. Chris C

    Chris C Well-Known Member

    Joined:
    2nd Apr, 2008
    Posts:
    1,327
    Location:
    Brisbane, QLD