The Securities and Exchange Commission's (SEC) actions against Goldman Sachs have  sent  credit default swap spreads spiraling wider not only for Goldman, but  for  the entire banking  sector, Fitch Solutions said in a release.

According to Fitch, CDS  on Goldman widened 41% after the SEC's announced civil lawsuit against Goldman that  alleged  fraud  relating  to ABACUS 2007-AC1, a CDO that the bank structured and sold in 2007.

CDS liquidity for Goldman also spiked, according to the firm. increasing five regional  percentiles  higher in reflecting the growing uncertainty over the bank's credit condition.

"Goldman's CDS have not broken through a 'BBB' trading pattern since the credit market bottom,'
said   Fitch  Solutions  Managing  Director  Jonathan  Di  Giambattista. "Considering that Goldman has ranked  in  the  top  10%  most  liquid names globally for the past five months, CDS market sentiment remains clearly divided about the firm's prospects."

The controversy  surrounding Goldman spilled over  to the broader banking sector, Fitch said. sending regional banking  CDS  spreads  wider in North  America (4.3%) and in Europe (1%).

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.