According to the Hartford Financial Services Group Inc. and National Rural Utilities Cooperative Finance Corp., there is an evident disconnect between the behavior of investors and their balance sheet health as shown by the credit default swaps which are widening.
Credit of the National Rural continues to be strong as seen in the positive feedback and ratings according to Steven Lilly, its Chief Financial Officer. Basis points have reached 164.7 which are almost double since September 22nd as per what the CMA Datavision prices reveal due to the swaps on credit default on the Herndon National Rural based in Virginia.
According to Lilly, there is no setback on the company’s access to marketplace and it continues to maintain its credit rating. It is due to lack of confidence in investors which leads to credit worthiness speculations, hedging against losses and more contracts. There has been an increase in cost for protecting defaults on corporate bond following the crisis in the credit market. There is apprehension that even some of the best finance companies may encounter trouble including Boeing Co. and General Electric Co.
With companies like MetLife Inc., Hartford and Prudential Financial Inc. facing record high costs of default protection, there was a steep fall in their share prices fuelling further speculation that the ongoing financial crisis is now affecting insurance companies too.
However, Shannon Lapierre, a spokeswoman for Hartford, an insurance company based in Connecticut, their liquidity is strong and there is no problem as such with their core operating business.
