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From Reuters:
The cost to insure the debt of Bear Stearns Cos (BSC.N: Quote, Profile, Research) surged on Monday and its share and put options were active on concerns that the company may be facing liquidity problems. Alan "Ace" Greenberg, chairman of Bear Stearns' executive committee, said market rumors concerning the Wall Street investment bank's liquidity are "totally ridiculous," CNBC television said. The cost to insure Bear's debt with credit default swaps jumped 150 basis points to around 590 basis points, or $590,000 per year for five years to insure $10 million in debt, said brokers.
"Bear Stearns shares and put options are active on unconfirmed liquidity concerns," said Paul Foster, options strategist at Web information site theflyonthewall.com in Chicago. Investors are aggressively buying puts, which convey the right to sell the stock, Foster said.
Bear Stearns' bonds also weakened to junk levels, and buying interest evaporated amid talk about liquidity problems, a trader said. "There probably isn't even a bid for the bonds right now," the trader said.
Bear Stearns 6.4 percent notes due in 2017 tumbled to 80.8 cents on the dollar, down about 3 cents, pushing yields up by 58 basis points to 602 basis points over Treasuries, according to MarketAxess.
