What's going on with Deutsche Bank's Junior CDs?

The bank’s 5-year junior CDS (which protects the subordinated debt against default), has surged another 80bps today to 541bps, which would also be a record high close. It has risen 354bps so far this year, indicating a sharp rise in the cost of insuring Deutsche bonds.

Why did Deutsche Bank's CDs cost a record high?

LONDON, Feb 11 (Reuters) - The cost of insuring exposure to Deutsche Bank subordinated debt via CDS rose on Thursday to a record high as mounting fears about European banks’ profitability led to a heavy selloff in their shares.

What's happening with Deutsche Bank's credit default swaps?

Deutsche Bank's credit default swaps (CDS) - a form of insurance for bondholders - shot up above 220 basis points (bps) - the most since late 2018 - from 142 bps just two days ago, based on data from S&P Market Intelligence. On Thursday, Deutsche CDS had their largest one-day gain on record, based on Refinitiv data.

What is a CDS?

WHAT IS A CDS ANYWAY? Credit default swaps are derivatives that offer insurance against the risk of a bond issuer - such as a company, a bank or a sovereign government - not paying their creditors. Bond investors hope to receive interest on their bonds and their money back when the bond matures.