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Navient Default Costs Surge on Restructuring
22 Oct
Summary
- Costs to protect against Navient default rose sharply on Thursday.
- A restructuring plan effectively cuts bondholders from growth areas.
- Five-year credit default swaps widened by 175 basis points.
On Thursday, the cost of protecting against a potential default by Navient Corp. experienced a notable increase. This rise followed the company's announcement of a significant restructuring.
The announced changes are set to effectively sever bondholders' access to the company's primary growth sectors. This strategic move has led to a widening of Navient's five-year credit default swaps. The swaps increased by 175 basis points, reaching 622 basis points as of noon on Thursday.
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