Good news for Europe as the cost for insuring sovereign debt against default fell in the third quarter of 2012, according to the CMA Global Sovereign Credit Risk report.
Ireland slipped out of the 10 most risky sovereigns for the first time since the first quarter of 2010 according to CMA, making space for Lebanon to enter the club of the world’s ten most risky sovereign debt issuers.
Although Irish 5-year credit default swap spreads tightened to 317 basis points from 554 basis points in the third quarter, there is still a 25 percent chance that Ireland will not be able to honour its debt or restructure it over the next five years.
If this sounds bad, it’s an improvement from last quarter’s 39 percent and stands up pretty well against Greece, which tops the table with a 90 to 99 percent chance of default or further restructuring.
It’s lonely high up for Greece on the Olympus of risky sovereigns – the list’s number 2, Cyprus, can only boast of a comparatively modest 57 percent chance of default or debt restructuring.