Azernews.Az

By Bloomberg

The cost of insuring high-yield corporate debt in Europe is set for the biggest weekly rise since December as Greece negotiates to avoid default.

The Markit iTraxx Crossover Index of credit-default swaps on high-yield companies climbed 36 basis points this week to 279 basis points, the highest since Feb. 20, according to data compiled by Bloomberg. Contracts insuring $10 million of Greek debt for five years signal an 79 percent probability of default, CMA data show.

Greece is seeking to secure funding after its creditors froze payments from a 240-billion euro bailout package, demanding that the populist anti-austerity government elected in January reform the nation’s finances first. Without a deal, Greece is at risk of missing almost 1 billion euros ($1.1 billion) of payments due to the International Monetary Fund next month.

“Greek government bonds and Greek corporates have come under significant pressure in the last few days as its ongoing involvement in the European Union becomes increasingly questioned,” Anthony Robertson, head of global leveraged finance at BlueBay Asset Management LLP, which oversees more than $65.8 billion, said. “Those fears are resonating in the market and people are looking to protect portfolios against that increased risk.”

Yields on 10-year Greek government bonds climbed to 13.20 percent Thursday, the highest since December 2012, and were at 12.81 percent Friday.

Talks on resolving Greece’s latest crisis must “intensify” before euro-region finance ministers meet at the end of next week, the European Commission said Thursday. IMF Managing Director Christine Lagarde warned she wouldn’t let Greece skip a debt payment.

“Some of the big, long-only credit managers are simply taking some risk off the table,” said Jon Brager, a London- based credit analyst at Hermes Investment Management Ltd., which oversees $45 billion. “Investors are becoming apprehensive of worsening relations with Greece.”