Greece World's Riskiest Sovereign - Again
Greece has remained the world’s riskiest sovereign debt for the second quarter running in the first quarter of this year, according to a report by independent credit market data provider CMA.
In its Sovereign Debt Credit Risk report Greece maintained its number one position with a 58 percent chance of a debt restructuring occurring within five years.
The report ranked the ten riskiest and the ten least risky sovereign debt positions based on assessing changes in the risk profile of sovereign debt issuers and their Credit Default Swap values for the first three months of 2011.
The ten riskiest also included Ireland and Portugal, with Ireland the most recent recipient of the EU bailout fund and Portugal admitting for the first time Wednesday that it needs a bailout.
The top six positions for the most risk remain unchanged. The geo-political events of the Middle East also had an impact on the ten riskiest, with Lebanon and Egypt making an appearance for the first time and Dubai maintaining a position among the top ten.
CMA said Egypt and Lebanon had replaced Spain and Hungary in the top ten, a reflection on the testing quarter for the Middle East region.
The cost of debt insurance widened out for the region in the quarter, as bond investors moved to the sidelines waiting for the unrest to pass.
However, the unrest is seen as a positive precursor to changes which in the longer term will lead to a more stable region by the credit markets, the CMA added.
The report's rankings are based on assessing changes in the risk profile of sovereign debt issuers and their CDS values for the first three months of 2011.
The least risky sovereign debts for the quarter were again dominated by Western Europe, with the top three positions occupied by the Scandinavian countries of Norway, Sweden and Finland. Due to the tensions in the Middle East, Saudi Arabia fell out of the least risky top ten.
Iceland was removed from this quarter's report due to illiquidity in Icelandic CDS and bonds.