Believe it or not, despite the Eurozone crisis, most countries sovereign credit risk fares better at the end of 2010 vs. 2009


The funny thing is that most people wouldn't believe the premises of the story that in the discourse of the last year, risk has fallen dramatically. Well, it is true considering where we were at the end of 2009 we thought that the world was going to end. When it didn't the market breathed a sigh of relief. Via Moody's:
The “man-bites-dog” story of 2010 is that global sovereign credit risk actually generally improved in 2010, even in Europe, where the sovereign debt crisis intensified and culminated in the EU/IMF bailouts of Greece and Ireland.

...With the exception of Europe, the mean and median default probabilities for all regions fell significantly over the year. However, even Europe saw a 17% decline in the median 5-year CDS-I EDF in 2010. Not only did 5-year CDS spreads fall during the year, but market risk premia – the extra spread over expected loss largely attributable to uncertainty and risk aversion – across regions also fell sharply, as evidenced by the relatively larger annual percent declines in CDS-I EDFs compared to CDS spreads. Together these trends suggest that 2010 was – again with the exception of the peripheral European states – generally a year of recovery from the financial crisis and economic weakness of the preceding two years. In the final week of 2010, CDS-I EDFs were mostly flat to slightly lower across all regions.
See how credit spreads have actually dropped. The numbers below represent the amount in basis points that the that the credit spreads have changed. A positive number means that credit spreads have gone up, negative numbers mean that credit spreads have gone down. Outside of Europe, only Vietnam's CDS has widened. Data via Moody's:

Country YOY CDS Change (BPS)
Greece611
Ireland245
Portugal181
Spain96
Hungary61
Belgium38
Italy38
Cyprus38
Malta26
Vietnam15
France11
Germany2
Netherlands2
Singapore1
Australia0
Denmark0
Norway0
Chile0
Japan-1
New-1
Finland-1
United-2
Hong Kong-3
Korea-3
Jordan-3
Thailand-4
Austria-4
Slovakia-4
Slovenia-4
China-5
Switzerland-5
Lebanon-5
Morocco-5
Poland-6
Sweden-6
United-6
Costa-6
Czech Rep.-7
Canada-7
Saudi-8
Malaysia-9
Israel-9
Qatar-9
Brazil-10
Peru-11
Mexico-13
Colombia-14
Croatia-15
Serbia-16
South-16
Panama-19
Bulgaria-20
Philippines-24
Turkey-25
Bahrain-28
Romania-30
Russia-30
Indonesia-36
Kazakhstan-41
Estonia-46
El Salvador-50
Oman-55
Guatemala-62
Uruguay-64
Lithuania-70
Trinidad-72
United-94
Dominican Rep.-113
Iceland-117
Iraq-146
Ghana-161
Sri Lanka-170
Venezuela-178
Pakistan-215
Latvia-265
Argentina-371
Jamaica-381
Ukraine-753
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