Mortgage lenders' and financial companies' debt insurance costs fell on Monday, continuing improvements from Friday when a Federal Reserve discount rate cut sparked a rally in most global markets.
The cost to insure the debt of Countrywide Financial Corp.'s home loan unit dipped to a mid price of 427.5 basis points, or $427,500 per year for five years to insure $10 million in debt, from 471.5 basis points on Friday, according to data by CMA DataVision.
Countrywide's credit spreads had a wild week last week, opening the week in the 300 basis point area, before leaping over 1,000 basis points on Thursday and then retracing.
Residential Capital LLC's credit default swaps also improved on Monday though the mortgage lender, which on Thursday was cut into junk territory, continues to trade at distressed levels.
The cost to insure ResCap's debt fell to 24 percent the sum insured, from 26.5 percent on Friday, in addition to annual payments of 500 basis points, CMA data showed.
U.S. brokers also saw their debt insurance costs fall, with Bear Stearns Cos. spreads tightening 31 basis points to 138 basis points, and Lehman Brothers rallying 19 basis points to 130 basis points, according to CMA.
Capital One Bank's credit spreads tightened 20 basis points to 90 basis points.