Reuters: Washington Mutual debt protection costs jump

From Reuters:

The cost of protecting Washington Mutual's debt for five years rose to $1.85 million on an upfront basis, plus $500,000 in annual premiums, up from about $1.35 million plus $500,000 annually on Thursday, according to a trader.

So to insure $10 Million of Washington Mutual's debt over 5 years it will cost roughly $4.35 million. If you think about this another way, the insurer is estimating a recovery of the debt around $5.65 million from $10 million. This puts Washington Mutual's debt almost at a 50% chance of going bad in the next 5 years. The hike also makes it harder for Washington Mutual to keep doing business.