The decision by Moody’s to downgrade the French government’s bond rating was anticipated by analysts in the Euromoney Country Risk Survey.
A chart-based comparison of the credit default swap (CDS) market with the results from Euromoney’s Country Risk Survey appears to show the direction of CDS spreads lagging the scores of ECR experts.
The decision by US bond investor Franklin Templeton to increase its holdings of Irish bonds by more than a third, to at least €8.4 billion, in the third quarter raises the question of whether Ireland is on the path to recovery. A positive rating action by Fitch to put Ireland’s BBB+ sovereign rating on stable would suggest it is.
A recent change in regulation to counteract naked short-selling is having repercussions in the market for credit default swaps. Reduced trading volumes and indistinguishable spreads for some EU sovereigns undermine their ability to signal risk differentials as clearly as Euromoney’s Country Risk survey, Jeremy Weltman reports.
The eurozone became even riskier in Q3 2012, according to the results of Euromoney’s Country Risk (ECR) survey. Spain, the world’s worst performer in the survey during that period, plummeted 14 places, while Italy and Slovenia registered increased risk too. Core economies Germany and France also got riskier in Q3, according to economists. However, there were signs that the worst might be over for the eurozone as a whole, with its average score deterioration slowing to 0.5 points on average in Q3, less than a third of the previous quarter’s fall.
The decision by S&P to upgrade its rating for Nigerian sovereign long-term risk, both foreign and local currency, by three notches to BB+, is another important development for Africa’s second largest economy.
Emerging markets are challenging the traditional safe havens as low-risk investment locations, according to Euromoney’s Country Risk Survey. Chile may be a well-established story by now, but there are other attractive alternatives, including Peru, Qatar and Turkey, that also boast improving risk scores. But buyers beware: several markets once thought to be great investment hopes are falling out of favour. Jeremy Weltman reports.
Upgrade by Fitch only confirms analysts’ improved perceptions of Turkey’s sovereign risk profile over the past decade.