(Recasts lead, updates CDS, bond levels)
NEW YORK, March 4 (Reuters) - The cost of protecting General Electric Capital Corp's debt against default eased on Wednesday after hitting a record high earlier in the session, according to data from Phoenix Partners Group.
Five-year credit default swaps on GE Capital traded around 15 percent upfront, plus 500 basis points annually, down from a record 20 percent upfront plus 500 basis points a year earlier on Wednesday. That means it now costs about $1.5 million in an upfront payment, plus $500,000 a year to insure $10 million of debt. The swaps had closed on Tuesday at 14 percent upfront plus 500 basis points annually.
Part of the recent widening in GECC's credit default swaps may stem from hedging by dealers in collateralized debt obligations, Tim Backshall, chief strategist at Credit Derivatives Research, said in a note on Monday.
GECC was included in many CDOs because of its high ratings and significant spreads, he said.
GECC's bonds also came under pressure in volatile trading on Wednesday. Yield spreads on its 4.8 percent notes due in 2013 widened by 187 basis points to 793 basis points over Treasuries, according to MarketAxess. (Reporting by Dena Aubin, Editing by Walker Simon) (firstname.lastname@example.org; +1-646-223-6325; Reuters Messaging: email@example.com))