JP Morgan default swaps hit as bank receives double-downgrade
The cost of credit protection on JP Morgan Chase debt has surged more than 25 basis points following a profit warning from the US investment bank and downgrades from rating agencies Fitch Ratings and Standard & Poor's.
Late yesterday, both Standard & Poor's and Fitch Ratings downgraded JP Morgan's debt rating. Fitch cited "the sustained weakness in the core operating performance" of a number of the bank's important businesses, as well as "challenging conditions" that "are expected to continue" as the rationale behind its downgrade.
Five-year senior credit default swaps for JP Morgan traded as high as 100bp-mid yesterday, up from 74bp-mid at close on Monday, according to credit derivatives brokers GFInet. The credit appeared on GFI’s ‘most active list’ for yesterday’s deals.
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