As fears grow over the stability of the European banking system, Standard Chartered is being hit by a double whammy in credit markets with investors increasingly worried about the lender’s business in Asia, where it earns most of its revenue.
Bloomberg News reports that the cost of protecting the company’s junior debt from default for five years using credit-default swaps almost doubled this year, rising to 479 basis points, the highest since April 2009, from 250 basis points, according to data compiled by Bloomberg. Subordinated bonds are among the riskiest part of a bank’s capital structure.
The credit-swap surge and share slump increases the pressure on Standard Chartered Chief Executive Officer Bill Winters, 54, to turn around a bank reeling from losses tied to bad loans after commodity prices slumped and economies from China to India cooled.
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