Swapovia

I don't pretend to understand credit swaps, but this example, from today, made an impression:

NEW YORK, Sept 29 (Reuters) - The cost of protecting Wachovia Corp's (WB.N:Quote, Profile, Research, Stock Buzz) debt with credit default swaps fell on Monday after news that Citigroup (C.N: Quote,Profile, Research, Stock Buzz) was buying Wachovia's banking operations.

Wachovia's five-year credit default swaps fell to about 550 basis points, or $550,000 a year to protect $10 million of debt, from 25 percent in upfront payments plus $500,000 annually before the news, according to data from several dealers.