Investment Chart Kondratiev Wave

Investment Chart Kondratiev Wave

Wednesday, 8 February 2012

Credit risk of government bonds diminishing; Emerging Markets better than France!

The table of Bespoke shows that in 2012 the insurance premium for almost all government bonds except Portugal is in a free fall.
The CDS premiums are still unbelievably high when you put them in historical context. 163 bp for France or 84 for Germany, that is quite a lot (where is the time that 10 bp was already considered as a rich premium?).
The world has changed, Latin America (Brazil, Mexico, Peru, Colombia and especially Chili) are now seen as more creditworthy than the most countries of the Eurozone and the same applies to Indonesia and the Philippines. Emerging Markets that only just have received the investment grade rating or even are considered as not investment grade when they don’t borrow in their own currency have now lower CDS premiums than France or Belgium (that has seen the biggest % fall of CDS premium in 2012).
The rating of the Developing Markets is still way too low compared to the underdeveloping countries in e.g. Europe.
Who should have thought in the Tequila crisis that debts of Mexico in 2012 would be judged safer than those of France?

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