News Column

Fitch Solutions: CDS Market Sentiment Souring for European Banks

July 22, 2014



NEW YORK--(BUSINESS WIRE)-- Five-year Credit Default Swaps (CDS) on the European banking sector have undergone notable widening over the past month, according to the latest CDS case study from Fitch Solutions.

Fitch's CDS Index for European banks is 16% wider, compared to a month ago. In contrast, CDS for European issuers overall has widened just 6% over the same time period.

"CDS referencing banks domiciled in Portugal, Italy and Spain widened the most in the last month - on average 60%, 25% and 20%, respectively," said Diana Allmendinger, Director, Fitch Solutions.

"Market concerns over Banco Espirito Santo in recent weeks have likely fuelled the CDS widening," Allmendinger added.

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

Fitch Solutions, a division of the Fitch Group, focuses on the development of fixed-income products and services, bringing to market a wide range of data, analytical tools and related services. The division is also the distribution channel for Fitch Ratings content.

Fitch Ratings and Fitch Solutions are part of the Fitch Group, a jointly-owned subsidiary of Fimalac, S.A. and Hearst Corporation. For additional information, please visit 'www.fitchsolutions.com'; 'www.fitchratings.com'; 'www.fimalac.com' and 'www.hearst.com'.



Fitch Solutions

Diana Allmendinger, +1 212-908-0848

Director

Fitch Solutions, 33 Whitehall Street, New York, NY 10004

or

Media Relations:

Athos Larkou, +44 203 530 1549, London

athos.larkou@fitchratings.com

or

Sandro Scenga, +1 212-908-0278, New York

sandro.scenga@fitchratings.com

Source: Fitch Solutions


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