SBI CDS jump to 14-month highs as rupee plunges

LONDON (Reuters) - The cost of insuring exposure to the debt of State Bank of India, used by investors as a proxy for the Indian sovereign, jumped on Monday to 14-month highs as the rupee plunged to new record lows.

Five-year credit default swaps on SBI traded at 351 basis points, a 45 bps rise from Friday's close, data provider Markit said.

This is the highest level since June 2012 and indicates an annual cost of $351,000 to insure $10 million worth of SBI debt for a five-year period.

India is fighting to stem a rout in the rupee which has hit record lows against the dollar on fears the country may fail to finance its current account deficit.

India has no traded sovereign debt outstanding and investors commonly use the state-owned SBI as a proxy to hedge exposure to India.

"The CDS move is understandable. When the currency is under pressure it raises the question of how they will finance the deficit, hence the reason CDS is widening," said Societe Generale analyst Guillaume Salomon.

(Reporting by Sujata Rao; editing by Joel Dimmock)