LONDON (Reuters) - The cost of insuring exposure to European junk bonds hit its highest in three months on Wednesday, as shares in banking stocks plummeted following a 20% drop in embattled Swiss lender Credit Suisse.
All major European credit default swap indices opened lower on Wednesday, reflecting a degree of stability in the market, but rapidly reversed those declines, as concerns about Credit Suisse compounded the nervousness among investors following the collapse of Silicon Valley Bank over the weekend.
The spread on the iTraxx European Crossover index, which measures the cost of insuring exposure to a basket of sub-investment-grade European companies, surged 27 basis points (bps) from Tuesday's close to 484 bps, its highest since Dec. 22.
Meanwhile, the iTraxx European Main index rose 7 bps to 97 bps, the iTraxx Europe senior financials was up 14 bps to 120 bps and the iTraxx Europe sub financials rose 26 bps to 214 bps, the data added.