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CDS Market Reaction to Geithner Plan

By Anonymous

The Geithner plan gets rave reviews from the CDS market, with serious spread tightening across the board. The CDX IG12 index closed 14bps lower, at 185bps.

Here are today's CDS spread changes for the major U.S. banks:

BofA: 21 bps tighter
Citi: 27 bps tighter
Goldman: 16 bps tighter
JPMorgan: 5 bps tighter
Merrill: 18 bps tighter
Morgan Stanley: 16 bps tighter
Wachovia: 13 bps tighter
Wells Fargo: 10 bps tighter

Other U.S. financials:

Berkshire Hathaway: 28 bps tighter
AMEX: 13 bps tighter
Capital One: 16 bps tighter

Clearly the CDS market thinks the banks will be willing to sell their troubled assets under the Geithner plan. I probably agree.

Full post as published by Economics of Contempt on March 23, 2009 (boomark / email).