Credit-default swaps insuring against losses on European financial debt climbed for a 10th day, the longest streak since August 2011, as the bank crisis in Cyprus and political turmoil in Italy alarm investors.
The Markit iTraxx Financial Index of swaps protecting the senior debt of 25 banks and insurers rose four basis points to 205, with the gauge heading for its worst month since November 2011. Contracts on Italy jumped to the highest since Nov. 16.
Cyprus’s banks opened their doors for the first time since policy makers imposed losses on depositors and bondholders, escalating Europe’s debt crisis for investors. Pier Luigi Bersani, leader of Italy’s biggest coalition, will report today on his negotiations to form a government after saying “only an insane person” would want to rule the nation at the moment.
“We expect the volatility and widening mode to continue,” analysts led by Mark Harmer at ING Groep NV in Amsterdam wrote in a note. “It seems that any negative headline has the potential to trigger another bout of panic selling.”
Credit-default swaps on Italian sovereign debt climbed 15.5 basis points to 310.5. Contracts on Spain increased 13 basis points to 302.25.
The extra yield investors demand to hold European financial bonds instead of government debt jumped to 176 basis points, the highest since Feb. 8, according to Bank of America Merrill Lynch’s Euro Financial Index.