Thursday, May 13, 2010

Country Default Risk Updated

Bespoke: The European aid package announced over the weekend has helped boost global equity markets across the board, and it has also caused sovereign debt default risk to decline significantly over the past two days. Below we highlight 5-year credit default swap prices ($, bps) for a number of countries around the world. For each country, we highlight where default risk stands now, where it was last Friday before the bailout, and where it was at the start of 2010 and the start of 2008.

Heading into the weekend, Portugal, Italy, Greece, and Spain (PIGS) had seen huge spikes in default risk in 2010, but they have all seen declines of 30% or more over just the last two days. Default risk for Portugal and Greece has basically been cut in half. CDS for other EU countries like Germany and France had also spiked significantly prior to the weekend, but they have since returned to much more normal levels.

Venezuela and Argentina currently have the highest default risks in the world, while Germany, Australia, and the US have the lowest default risk. The US hasn't seen a big decline in default risk this week, but that is because it barely moved higher even in the face of volatile markets last week (why the US even has CDS is a different topic).

My Take: Malaysia is at 90.9. Its a meaningless figure unless you look at where you stand or rather whom you are standing next to. Japan is at 80.1, surprisingly we are above Chile which stood at 87, I guess they have lots of oil. Take comfort in that Thailand is at 120. UK drew closer to us at 85. Indonesia is at 178. Belgium is at 88.7. The Philipines is at 169. China is at 72. We are lower than South Korea which came in at 101.

Sometimes we get into a lot of internal bashing and politicking, and we are not thankful enough of where our country is fiscally. Yes, I agree wholeheartedly that we could have been so much more and so much better. Still, it is gratifying to note that we are not in "real danger" of a country default - OMG, can you imagine if we are at 200 or 300.

Here are some notables: Dubai at the ominous 444, Vietnam at 252, Argentina at 921 ....

Funnily though, with the World Cup coming soon, most of the participating nations are also the ones with the more perilous debt ratings:
Argentina 921
Brazil 127
Mexico 125
South Africa 153
Portugal 229
Greece 533
Spain 165
Italy 145

So, the key to having a great footballing team is to be fiscally irresponsible???
; )


Anonymous said...

thank you for you to make me learn more,thank you∩0∩

JP said...

UK on 85.1

Big game bottlers!

Philip Lee said...

Would you be so kind to provide figures for Singapore, Canada, New Zealand and Australia even if just current standing figures. I was searching for the source of these figures on the internet, but could not find them.


Salvatore_Dali said...


lol, so would i, i think u have to subscribe to Bespoke for that information.

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