Below are charts that show the change in default risk (5-year credit default swaps) over the past two and a half years for six of the most widely followed banks and brokers here in the US. Over the past week or so, these financial firms have seen a pretty big drop in default risk as their stock prices have moved higher.
Morgan Stanley (MS) still has the highest default risk at 322 bps, followed by Goldman Sachs (GS) at 247 bps. Bank of America (BAC) and Citigroup (C) are in the middle of the pack, while JP Morgan (JPM) and Wells Fargo (WFC) have the lowest default risk. Wells Fargo (WFC) is the only company with a 5-year CDS price below 100 bps, clearly establishing it as the "safest" of the big US financial firms.
