Will sovereign risk premiums continue to fall?

Summary

In recent months we have witnessed a notable compression in sovereign CDS at the global level, in an economic scenario that is full of uncertainty and in which public debt is at an all-time high.

Key points

• Key points:
• The global median of sovereign CDS prices —which reflect the cost of securing against the risk of sovereign bond default— has reached its lowest level since the end of 2007.
• Reaching levels not seen since 2009 in Greece and since mid-2008 in Portugal, before the sovereign debt crisis broke out in the EU.
• Spain's sovereign CDS is also very low, but it had already reached similar levels in early 2018.

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