Romania is placed in a better position than Italy, Hungary, Bulgaria, Portugal or Greece in terms of country’s capacity to honor its foreign debts in the next five years, according to S&P Capital IQ’s Global Sovereign Debt Q4 2014 Report, recently released.
Thus, Romania scored at the end of last year 9.8 percent for the five-year cumulative default probability, while Italy recorded 10.4 percent, Hungary – 12.2 percent, Bulgaria – 12.8 percent, Portugal – 16.8 percent and Greece – 62.9 percent.
Venezuela remains at the top of the table of the most risky sovereign credits following Argentina’s default in Q3 2014, resulting in its removal from the report, with spreads widening 169 percent and the five years credit default swap (CDS) implied cumulative default probability (CPD) moving from 66 percent to 89 percent, the report shows.
According to rating institution, the only major risk source, unrelated to commodities prices is Greece where CDS spreads “widened to 1281bps – an election as early as January could see a change of government and fears over a possible exit from the Eurozone have affected CDS prices”.
In the region, Russia enters the top 10 most risky table as CDS spreads widened around 90 percent following the fall in oil price which is adding more pressure to an economy already subject to continued economic sanctions.
The S&P report is based on investors’ risk perception, identifying potential developments that may lead to changes therein.
The report examines trends in CDS whereby investors secure sovereign debts against the probability of default in five years – from a regional perspective, as well as the risk for global sovereign debt issuers, based on the five-year cumulative payment default risk as of December 30, 2014, helping investors to better assess long-term risks.