64129
Global Default Risks Mostly Receded in Past Year
World Economy

Global Default Risks Mostly Receded in Past Year

Risk perception for most of the world’s countries has improved in the past year, according to a Standard Chartered analysis of credit default swaps, or CDS, contrasting with deterioration in France, Italy, the United States and Germany. CDS are derivatives used by investors to hedge against a default or restructuring of debt. The higher the risk of default, the higher the CDS spread, Reuters reported. Standard Chartered said in a report on Tuesday that the CDS spreads of 35 countries showed Venezuela, Greece and Ukraine are still perceived as the sovereigns most at risk of default, with Venezuela trading with spreads of more than 3,000 basis points. But 31 of the countries, including the above, saw spreads tighten since March 2016, it said, attributing the gains to oil price rise and improving economic growth across the developing world.

“The main message—of an improving global picture—is in line with our own global GDP forecast: we see real GDP growth edging up markedly by 0.5 percentage point to 3.6% in 2017... This would be the strongest acceleration of global output since 2010,” the bank told clients. But it said a packed election calendar had driven a sharp rise in French and Italian CDS, with the former having widened as much as 65% on fears that the right-wing Marine le Pen could win presidential elections held in April-May 2017. That possibility was done away last weekend as centrist Emmanuel Macron scored a decisive second-round win over Le Pen.

French CDS have since fallen to around 30 bps, according to IHS Markit, after surging above 60 bps in February. CDS for Italy, which goes to the polls early next year with a plethora of euro-sceptic parties in the running, rose by 42% in the past year, according to StanChart. US CDS meanwhile widened by 13% over a year marked by the election of Donald Trump as president on a antiglobalization, anti-immigration platform. German CDS widened 5%, which Standard Chartered attributed to “perceived contagion effects for the country, reflecting its role as the engine of the eurozone”.

Short URL : https://goo.gl/Ch1ZXu
  1. https://goo.gl/njHD8I
  • https://goo.gl/K9MzJK
  • https://goo.gl/3isz6s
  • https://goo.gl/TFJzWQ
  • https://goo.gl/1oWmO2

You can also read ...

ECB President Mario Draghi (L) and US fed chair Jerome Powell at the ECB Forum on Central Banking in Sintra, Portugal, June 20.
The world’s most-powerful central bankers warned that...
Consumer prices rose just 0.1% in May, down from a 0.3% gain in April.
Canada’s economy showed unexpected weakness in the second...
Brazil CB Holds Rate Steady
For the second consecutive time, the Central Bank of Brazil...
China Trade Surplus Shrinks
China’s trade surplus shrank markedly in the first five months...
Inflation rate forecast for the full year is averaged around 3.1%.
Saudi Arabia is so intent on changing its identity that today’...
Ukraine Shadow Economy Drops to 31% of GDP
Shadow economy in Ukraine dropped by 4% in 2017, to 31% of GDP...
IMF to Lower Eurozone Growth Projections
The International Monetary Fund will downgrade growth...
Turkey Sees 22% Yearly Decline in FDI
Turkey attracted some $3.1 billion in net international direct...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus