The CBA CDS price was up again yesterday to 119bps as concerns about bad loans in Australia and abroad mount. These are no longer theoretical as Arrium presents a possible large blow to banks, ANZ has already announced rising commodity-related provisions and we are seeing dumb bubble mortgage arrears rise rather suddenly and steeply (albeit from a low base), as well as ABS weakness:
Add in the context of a global commodities bust and debt contagion, as well as regulator’s butt-covering drive to raise capital locally and it’s no wonder bank credit quality is in question.
Wells Fargo and Credit Agricole also saw spreads widen:
But not as much as CBA so the Ponzi Index rose again:
The chronic credit crunch rolls on.