Greece Leads Drop in Sovereign Default Risk on Rescue Package

Greece led a decline in the cost of insuring against a default on European government bonds after politicians agreed on an aid package to end the 21-month-old sovereign crisis and prevent contagion to Spain and Italy.

Swaps on Greece plunged 500 basis points to a six-week low of 1,500 as of 12:15 p.m. in London, dropping the most on record. The Markit iTraxx SovX Western Europe Index of default swaps tied to 15 governments fell 20 basis points to 243.