Italy Seen as Bigger Default Risk Than Indonesia, Philippines
Italy’s debt costs more to insure against default than that of the Philippines or Indonesia, as Europe’s debt woes overshadow a credit rating six levels higher than either of the emerging-market nation, Bloomberg reported. Credit-default swaps on Italy, the only borrower among Europe’s so-called peripheral nations not to suffer a cut in its credit rating since last year, trade at 166.5 basis points. That’s more than the 127 basis points for Indonesia, or the 126 basis points for the Philippines. Italy’s credit default swaps reached a record high of 244.7 basis points on June 4 after Greece’s near-default fueled investor concern about the solvency of the euro-region’s most- indebted nation. The price of insuring Asian debt has dropped amid record demand for emerging-market bonds as investors wager those economies will drive the global recovery while Europe wrestles with surging budget deficits and sluggish growth. Read more.