BP: Beyond payment?

Bets that BP will default on its bonds hit an all-time high Tuesday, as investors fled the scene of the Gulf of Mexico oil spill.

The cost of insuring against a default on BP (BP) debt soared 79%, according to CMA. The spike came as the London-based company admitted the failure of its latest effort to contain the biggest-ever U.S. oil spill and the government said it would stop holding joint press conferences with the company. Attorney General Eric Holder promised a criminal investigation of the spill.

Investors were fleeing the shares of all the companies with a role in the Deepwater Horizon disaster. BP plunged 15% and Transocean (RIG)12%, both hitting 52-week lows. Anadarko (APC) dropped 19%.

BP shares have lost $70 billion over the past six weeks, prompting some observers to say the stock is now oversold. But with oil now washing ashore in Alabama and estimates of the cost of cleaning up the disaster skyrocketing, it's clear there's risk even at lower levels.

What's more, the politics are getting uglier too. Robert Reich, a former Clinton administration labor secretary who now teaches at the University of California at Berkeley, proposed Monday that BP be nationalized for the sake of focusing all its efforts on cleaning up the gulf mess.

It now costs $179,000 annually to insure $10 million of BP bonds against default for five years, CMA said. That compares with $350,000 for Transocean and $250,000 for Anadarko.