The cost of insuring the debt of Iceland’s three largest banks against default in the credit derivative markets soared to record highs yesterday, with the cost of buying protection on Glitnir slicing through the threshold of 1000 basis points for the first time in history.

According to data from Markit, the cost of Glitnir’s credit default swaps – derivative contracts that offer a type of insurance against default – rose to 1017 basis points from 841 basis points a week ago, underlining heightened fear the bank may run out of cash.