Top 10 Riskiest Sovereign Debt

A report by CMA Vision evaluates the risk of sovereign default globally.

The top 10, with a probability ranking of default within 5 years are:

  1. Venezuela 57.7
  2. Ukraine 54.6
  3. Argentina 49.1
  4. Latvia 30.1
  5. Iceland 25.4
  6. Dubai 25.1
  7. Lithuania 19.3
  8. Greece 17.4
  9. Romania 17.2
  10. Lebanon 17

Both Greece and Romania are new entries into the top 10.

Of the world's safest sovereign debt, the United States ranks 8th. Norway is #1. In fact all of those silly socialist countries are ranked in the top safest.

The report notes:

Both the USA and UK have been among the worst performing sovereign CDS this quarter- the UK is some 77% wider, the USA out by nearly 66%.

Concerns are mounting about the increase of debt to GDP ratios in UK and USA, 97% and 75% respectively.

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I don't think this list

have much relevance to reality.

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why not?

It has Greece, Dubai and Romania, although I don't know the debt ratios of every country, seemed worthwhile to look at to me.

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For example

Venezuela has a growing economy and a stable banking system. Their unemployment rate is 2% lower than ours. So why are they listed as #1?
Argentina has a current account surplus and large current account reserves. So why are they #3?

And finally, where is Britain? Why aren't they on this list? In fact, why are they still listed as AAA?

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this is based on credit default swaps

and a model that includes CDS pricing.

So, take it with a grain of salt for obviously Venezuela having a high CDS spread is probably more about politics.

Why are the credit ratings agencies given as much credibility as ever without any reforms?

Maybe I should have put this into a comment because I have to agree, just going off of the CDS markets, pricing and spreads....as if these global trades are based always in reality (cough, cough).

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