10/01/2011
Saudi Arabia joins the ranks of top 10 least risky sovereigns
Saudi Arabia entered the list of the least risky sovereigns, coming in at 10th place, CMA Datavision said Saturday. Among the least risky sovereigns, Norway, Finland and Sweden topped the ranks again but the Netherlands fell out of the top 10 as its debt insurance costs rose.
The rankings are based on CMA’s calculations, which include the cumulative probability of default.
CMA is the world’s leading source of independent data on the OTC (over-the- counter) markets. OTC trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties.
The debt risk profile of Germany worsened, coming in at ninth place on the least risky - down four notches.The United States, however, improved its position, jumping from ninth to fifth place, benefiting from the Federal Reserve’s plan to pump $600 billion to kick-start the economy.
But European Union member Hungary, with its high public debt-GDP ratios and controversial policies, entered the ranks of the riskiest sovereign debtors at ninth place, its debt insurance costs up 18 percent over the quarter.
Greece topped a list of countries seen as most likely to default on debt, while fellow euro zone member Spain also joined the ranks of the riskiest sovereign debtors in the fourth quarter of 2010, CMA Datavision said.
Two other peripheral euro zone states, Ireland and Portugal, rose higher within the top 10, while core members of the 16-country bloc were among those who saw the cost of insuring their debt against default rise most sharply.
"The top five worst performers for the quarter are from Western Europe, confirmation that 2010 was one of the most difficult years for the region since the introduction of the euro in 1999," the data provider said in a report.
The cost of insuring Spanish debt against default or restructuring rose by over 50 percent, placing it seventh on the list of the 10 riskiest sovereigns, CMA said in the report, which was released late Thursday. Ireland and Portugal each saw their rankings on the risk-list rise several notches in the quarter, to third and fourth place respectively.
The final quarter’s worst performer was Belgium, whose CDS widened to 219 bps - a rise of 70.4 percent - due to its high debt and paralyzed government. It was followed by Spain and Germany, both of which saw CDS rise over 50 percent, while Dutch and French debt insurance costs jumped by over 35 percent.
Debt insurance costs for Western European sovereigns as measured by the benchmark Markit iTraxx CDS index have risen above those of emerging Europe for the first time, after the euro debt crisis fuelled a rise of almost 140 bps last year.
Argentine CDS eased nearly 20 percent over the quarter as the country started moves to restructure defaulted debt, while Romanian debt insurance costs fell by 17 percent in the last three months of 2010, allowing it to leave the top 10 list.
