Changes in policy pricing strategy may be leading to wider credit default swap (CDS) spreads for MGIC Investment Corporation, according to Fitch Solutions in its latest CDS case study snapshot.

Five-year CDS spreads on MGIC widened over 100% since the start of the year to price at the widest levels observed since June of 2013. The cost of credit protection on MGIC's debt has moved further into distressed space and is now pricing in 'B+' territory.

"CDS on MGIC began widening steadily since the start of the new year, leading up to the company's fourth quarter earnings release," said Director Diana Allmendinger. "Dampening market sentiment for MGIC may be attributed to changes in its pricing strategy, which may result in a reduction of policies for 2016."

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

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