Romania ranks better than Italy or Hungary for default risk

Romania ranks better than Italy and Hungary in the latest country default risk ranking, made by Deutsche Bank. The ranking is based on the market price of credit default swaps (CDS). The CDS is a financial instrument that investors use to protect themselves against country default risk. The higher the price of a country’s CDS (also known as spread), the more money investors have to pay for this insurance, which means that the respective country is perceived as riskier. The prices of the CDS are expressed in basis points and usually add up to the costs of the loans which means that riskier countries, which have higher CDS prices, must pay higher yields to financial investors to borrow money. Romania currently ranks 20th among the 49 countries which Deutsche Bank included in the analysis, with a CDS spread of 130 basis points, as of July 3, 2015, reports local Economica.net. Italy ranks 18th with 134 bps, Hungary is 15th with 159 bps, and Bulgaria is 12th with 180 bps. Romania is still riskier than Poland (74 bps), Czech Republic (47 bps), and the Baltics. The riskiest countries are Argentina (5,393 bps), Venezuela (4,291 bps) and Ukraine (3,885 bps), as Greece was not included in the ranking. The safest countries are Sweden and Norway, with CDS spreads of 14 bps. editor@romania-insider.com