UK credit default swaps hit fresh 27 month high

LONDON (Reuters) – The cost of insuring exposure to Britain’s sovereign debt rose by 2 basis points on Wednesday, hitting levels last seen in June 2020 when markets were recovering from the COVID-19 rout, after Liz Truss took over as prime minister.

Five year credit default swaps climbed to 27 bps after closing at 25 bps on Tuesday, data from S&P Global Market Intelligence showed.

Markets had greeted the arrival of Truss on Tuesday with the sharpest sell-off of long-dated UK government debt since the COVID-19 pandemic, with 10-year yields hitting their highest since 2011 at around 3.15%.

Truss vowed to take immediate action to tackle one of the most daunting set of challenges for an incoming leader in Britain’s post-war history led by soaring energy bills, looming recession and industrial strife.

(Reporting by Karin Strohecker; editing by Dhara Ranasinghe)