U.S. Treasury CDS widen after Fannie, Freddie bailout: trader

LONDON (Reuters) - The cost of insuring U.S. government debt against default rose on Monday after the bailout of U.S. mortgage giant Fannie Mae and Freddie Mac, a trader said.

Five-year credit default swaps on U.S. Treasury debt widened 2 basis points to 17 basis points, and CDS on 10-year debt widened 3 basis points to 21 basis points, the trader said.

The rescue of Fannie and Freddie, which guarantee almost half of the $12 trillion of outstanding U.S. home mortgage debt, could be the biggest bailout ever to support the U.S. housing market.

"The GSE (government-sponsored enterprises) bailout will not inject any funds in the real economy, but it will rather result in higher taxation and higher indebtedness of the government," analysts at BNP Paribas said in a note to clients.

(Reporting by Maya Thatcher and Jane Baird; editing by David Stamp)