From today’s Independent:

Britain has become a worse credit risk than McDonald’s and a host of other large companies, figures produced for The Independent reveal.

The collapse in Britain’s credit rating has taken place over the past two and a half months, since the Government underwrote the banking system and decided to spend its way out of recession. Investing in UK government debt is now almost twice as risky as buying McDonald’s corporate bonds, according to the market in credit default swaps (CDS), which provides insurance for the buyers of such debt.

The government debt of large economies such as the UK would normally be considered far more secure than corporate bonds. However, on 29 September, the cost of buying insurance against default on UK five-year government debt became more expensive than the equivalent cover for the US burger chain and has since overtaken Kellogg’s and Coca-Cola, according to data from Bloomberg.

The cost of insuring for a year against default on £10m of five-year UK debt has jumped from less than £30,000 to £120,000, compared with the current price of £77,000 to protect against a similar McDonald’s default.

The extraordinary movements in the CDS market also reflect market concerns about the highly leveraged British economy, which is sliding into a recession that the International Monetary Fund has predicted may be worse than the slowdown in the US.

“It looks daft, it is daft, but that is where the buyers and sellers are and the way business is getting done in the CDS market,” one analyst said.

Dear Prudence, won’t you come out to play…?