Tuesday, July 31, 2007
US sub-prime spreads to Europe
The cost of insurance against credit defaults hit record levels on both sides of the Atlantic on Monday amid concerns that some investors were being forced to sell assets to cover losses on subprime mortgages. Investors rushed to buy contracts that would protect them against corporate credit defaults after it emerged that more European insitutions had suffered losses following the crisis in the US subprime mortgage market. [Two German banks] warned they would be hit by losses from risky US home loans to borrowers with poor credit histories.