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Sunday, November 8, 
9:17 am

Morgan/Wachovia talks tightening credit default spreads

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Rumors of talks for potential merger of Morgan Stanley and Wachovia Corp, are calming the debt markets as spreads on credit default swaps for both banks tightened Thursday morning.

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Reuters is reporting that five-year swaps on Morgan Stanley fell by 108 basis points to 890 basis points, or $890,000 a year to protect $10 million of debt, while Wachovia's swaps fell by 47 basis points to 700 basis points, according to data from CMA DataVision.

Talk of a Morgan/Wachovia tie-up also eased things for Goldman Sachs, the only other remaining independent investment bank. After days of seeing the spread on its credit default swaps soar, Goldman Sachs' swaps fell by 90 basis points to 530 basis points. On Tuesday, the spread on Goldman's swaps were wider than those of Lehman Brothers Inc.'s a week ago, according to Aleablog.com. - George White

See Reuters story
See Dealscape post on Morgan and Goldman CDS




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