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MUMBAI: The cost to insure against a potential default by Indian banks has risen about a fifth in the past two weeks as various states imposed local curbs on mobility and businesses.
Credit Default Swaps (CDS), an insurance against default, tied to
State Bank of India are now at levels last seen during the peak of the first wave of coronavirus. The CDS rates seem to discount the market-beating earnings of private lenders for the fourth quarter.
“Global risk premiums for Indian lenders have gone up amid this volatility,” said Ganeshan Murugaiyan, head of investment banking for India at
Cost to cover default risks goes up for banks
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Synopsis
Credit Default Swaps (CDS), an insurance against default, tied to ICICI Bank and State Bank of India are now at elevated levels that were last seen during the peak of the first wave of coronavirus. The CDS rates seem to discount the market-beating earnings of private lenders for the fourth quarter.
Agencies
The sentiment in the CDS market slightly improved on Tuesday with the gauge falling a few basis points after the international community started sending Covid assistance to New Delhi.
The cost to insure against a potential default by Indian banks has risen about a fifth in the past two weeks as various states imposed local curbs on mobility and businesses.