DUBAI, June 7 (Reuters) - Prices of Qatari credit default swaps, used to insure against the risk of a sovereign debt default, continued edging up early on Wednesday because of the diplomatic rift between Qatar and other Gulf states.
Five-year CDS were at 75.3 points, the highest level since mid-February, compared to 72.4 late on Tuesday and 65.5 at the end of last week, before Saudi Arabia, the United Arab Emirates and Egypt cut ties with Qatar, accusing it of backing terrorism.
Investors are concerned about the possible disruption to Qatar's banking system, which has depended on Gulf loans and deposits to support its rapid growth.
However, CDS levels suggest oil and gas prices are in the long run a much bigger factor for confidence in Qatar, the world's biggest liquefied natural gas exporter. Qatari CDS hit a peak of 137 in February 2016, when oil prices were slumping.
Qatari CDS imply a default probability of 5.1 percent in the next five years. They are still substantially lower than Saudi Arabian CDS, which are at 90.2. (Reporting by Andrew Torchia)