Japan Govt Debt Insurance Costs Spike To 125 BPs On Nuclear Fears

Japan Govt Debt Insurance Costs Spike To 125 BPs On Nuclear Fears

 

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LONDON (Dow Jones)--The cost of insuring Japan's government debt against default continued its sharp rise Tuesday, as officials strove to regain some control of the Fukushima Daiichi nuclear power plant.

At 1115 GMT, Japan's five-year sovereign CDS spread was 31 basis points wider at 125 basis points, according to data provider Markit, after a spike in radiation levels which put the nation on high alert.

The Markit iTraxx Japan index maintained its wider levels from morning trade, with spreads 23 basis points wider on the day at 140 basis points.

An earthquake measuring 8.9 in magnitude rocked Japan Friday and triggered a tsunami that has devastated much of the region and led to three explosions at the country's Fukushima Daiichi nuclear power plant.

CDS function like a default insurance contract for debt. A rise of one basis point in the cost of five-year CDS equates to a $1,000 rise in the annual cost of protecting $10 million of debt for five years.

-By Irene Chapple, Dow Jones Newswires; 44 207 842 9291; irene.chapple@dowjones.com (Yuka Hayashi and Hannah Benjamin contributed to this article) 

Posted by Nikkei 225 at 10:07
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