An index of credit default swaps (CDS) on U.S. investment-grade companies on Monday hit an intra-day high of 89.6 basis points, its highest since November, as investors worried about contagion risks after the collapse of Silicon Valley Bank (SVB) and New York's Signature Bank in the space of 72 hours.
Global banking shares plunged as moves by the United States to guarantee deposits at tech-focused lender SVB failed to reassure investors that other banks remain financially sound.
Rising CDS spreads signal investors are hedging bets on a deterioration in credit quality. The equivalent index for CDS on junk-rated companies fell in price to 98.9 on Monday, its lowest since November, according to data from IHS Markit. Investment grade credit spreads, which indicate the premium investor demand to hold corporate bonds over safer government debt securities, have also been widening - an indication that SVB's failure
, the second largest bank failure in U.S. history, sparked broader concerns over whether companies can still fund themselves in a higher interest-rate environment.
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