Bond Risk Falls on U.S. Treasury Rescue

The cost of protecting government bonds from default fell Monday after the U.S. Treasury's takeover of Fannie Mae and Freddie Mac boosted investor confidence that the global credit crisis may ease.

Credit-default swaps on Russian debt fell from the highest since November 2004, dropping 22 basis points to 143, according to CMA Datavision in London. Contracts on Gazprom fell 28 points to 279.

Russian default risk surged last week when the Central Bank was forced to shore up the ruble after withdrawals by investors sent the currency to its lowest level in almost a year. The Georgia conflict last month prompted an outflow of funds from Russia, contributing to the worst quarterly slump in stocks since the government's debt default a decade ago.

"If the change in investor perception of risk spreads to the Russian market, we'll soon see a significant rebound,'' Trust Bank analyst Vladimir Bragin wrote in a note Monday.