The following is an updated table of country default risk courtesy of Bespoke Invest
According to Bespoke Invest, (all bold highlights mine)
``The CDS prices represent the cost per year to insure $10,000 of debt for 5 years. The US CDS price is quoted in Euros. The list is sorted by year-to-date change, and as shown, default risk in Russia and Australia is down the most in 2009 at -77%. US default risk is down 68.1%, which is the most of any G-7 country. Japan is the only country that has seen default risk actually rise in 2009, but it also had the lowest CDS price of any country at the start of the year. Overall, while CDS prices are down sharply in 2009, they remain well above where they were at the start of 2008, so there's still plenty of recovery work to do."
Additional comments:
Falling cost of insurance on global sovereign debt papers seems consistent with today's general climate where there has been a significant reduction in risk aversion, mainly due to massive and concerted liquidity injections.
This fires up the self reinforcing collateral-lending feedback loop mechanism where rising collateral values prompts for more lending, and more lending increases collateral values.
This seem to also filter into sovereign instruments too. For example, the Philippines has taken advantage of today's yield searching landscape to book its third dollar denominated debt this year. This comes amidst record bond issuance in parts of the globe.
While this paints an impression of stability, stability becomes future instability as the credit cycle expands on a pyramid structure, otherwise known as the Ponzi finance.
Bespoke rightly points out that most countries have seen their CDS levels STILL significantly higher when compared to the last column or the start of 2008, in spite of the general improvements.
This is a noteworthy reference point. Only Lebanon has seen its CDS rates today lower than the start of 2008.
Moreover the Philippines, startlingly, could be reckoned as the second best performer where its CDS levels are back to the start of 2008! Perhaps this could be one reason she has easily raised a third round of debt issuance this year.
Lastly Indonesia and Brazil are among the closest to recovering the start of the 2008 levels.
Again the marked improvements of credit risks could serve as a staging point for massive levered risk taking-ergo a new bubble.
According to Bespoke Invest, (all bold highlights mine)``The CDS prices represent the cost per year to insure $10,000 of debt for 5 years. The US CDS price is quoted in Euros. The list is sorted by year-to-date change, and as shown, default risk in Russia and Australia is down the most in 2009 at -77%. US default risk is down 68.1%, which is the most of any G-7 country. Japan is the only country that has seen default risk actually rise in 2009, but it also had the lowest CDS price of any country at the start of the year. Overall, while CDS prices are down sharply in 2009, they remain well above where they were at the start of 2008, so there's still plenty of recovery work to do."
Additional comments:
Falling cost of insurance on global sovereign debt papers seems consistent with today's general climate where there has been a significant reduction in risk aversion, mainly due to massive and concerted liquidity injections.
This fires up the self reinforcing collateral-lending feedback loop mechanism where rising collateral values prompts for more lending, and more lending increases collateral values.
This seem to also filter into sovereign instruments too. For example, the Philippines has taken advantage of today's yield searching landscape to book its third dollar denominated debt this year. This comes amidst record bond issuance in parts of the globe.
While this paints an impression of stability, stability becomes future instability as the credit cycle expands on a pyramid structure, otherwise known as the Ponzi finance.
Bespoke rightly points out that most countries have seen their CDS levels STILL significantly higher when compared to the last column or the start of 2008, in spite of the general improvements.
This is a noteworthy reference point. Only Lebanon has seen its CDS rates today lower than the start of 2008.
Moreover the Philippines, startlingly, could be reckoned as the second best performer where its CDS levels are back to the start of 2008! Perhaps this could be one reason she has easily raised a third round of debt issuance this year.
Lastly Indonesia and Brazil are among the closest to recovering the start of the 2008 levels.
Again the marked improvements of credit risks could serve as a staging point for massive levered risk taking-ergo a new bubble.
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