Oct. 4 (Bloomberg) -- The cost to protect the debt of Morgan Stanley against losses fell from the highest levels in about three years after a report that European Union officials were examining ways to coordinate the recapitalization of struggling banks.
Credit-default swaps on Morgan Stanley fell 13 basis points to 570 basis points as of 4:01 p.m. in New York, according to broker Phoenix Partners Group. The contracts earlier traded as high as 650 basis points, the highest since October 2008, the month after Lehman Brothers Holdings Inc. filed for bankruptcy.
The Financial Times quoted Olli Rehn, European commissioner for economic affairs, as saying there is an “increasingly shared view” that the region needs a coordinated approach to halt the sovereign debt crisis.
Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
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