Sovereign Default Swaps at Record Over Companies

Investors are paying record-high premiums to insure against default on European sovereign bonds relative to corporate notes as governments struggle to reduce fiscal deficits while companies repair balance sheets.

An index of credit-default swaps on 15 European governments now exceeds a gauge of investment-grade credit risk by about 50 basis points, according to data from CMA and JPMorgan Chase & Co. Corporate swaps are historically more expensive than sovereign contracts.