With Goldman Stock Down 5%, CDS Surges 21%, Still Rich By 16%

Zero Hedge

Goldman Credit Default Swaps have surged by over 20% on the day the firm may have finally lost its trading “edge.” With a 5% decline in the stock, the company default risk has jumped to a 5 month high at 121 bps. The last time its was here was on September 14th, when the stock was $177/share.

Yet a relative value comparison since September 2, 2009 (if one belives in such things) indicates that the Company CDS is rich  by about 16%. If traders believe today’s stock price as indicative of the true value of GS, we anticipate a widening in Goldman CDS to a level in the upper 130s/low 140s.

Comment on this post below.