Shares of large German lender Deutsche Bank (NYSE: DB) traded as much as 11.3% lower in pre-market trading on Friday before paring some of those losses. As of 10:47 a.m. ET, the stock was down roughly 8%. The culprit appears to be an abrupt rise in the cost of credit default swaps (CDS) tied to the bank.

This morning, the cost of Deutsche Bank's five-year senior CDS rose to 2.22%, up from 0.88% earlier this month. CDS are essentially a way to hedge against the risk of default, so if the cost of CDS goes up, it can be an indication that investors are more concerned about a company.

While Deutsche Bank has had its fair share of issues in the past, the bank does appear to have made significant progress in recent years, especially from a financial standpoint. After embarking on a significant restructuring plan in 2019, it has now reported a profit for 10 consecutive quarters. In February, the bank confirmed that it still expects to deliver a greater-than-10% return on tangible equity by 2025.

Continue reading

Source Fool.com