Brazilian debt insurance costs jumped to their highest in almost seven years on Thursday and sovereign dollar bonds fell 2-3 cents across the curve on fears of a deepening political and financial crisis.
Other emerging assets also sold off as world stocks slid towards two-year lows but the biggest losses came in Brazil where the real currency fell another 1.5 percent to fresh record lows, shrugging off central bank interventions.
Five-year credit default swaps (CDS) rose 33 basis points from the previous close to 513 bps, according to data from Markit. The CDS have risen almost 200 bps since the end of August and last traded above 500 bps in October 2008.
“Brazil is in a deep economic, currency and confidence crisis. The decline in the currency is unprecedented, similar to the collapse of the (Russian) rouble last year … accordingly CDS are jumping and bond yields are rising,” said Bernd Berg, a strategist at Societe Generale in London.
Brazil Energy Insight 
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