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16 June 2015 by lberuti

One can argue that volumes on the sovereign reference entities are not what they once were and it would be difficult to say otherwise. Nevertheless, they still rank among the most actively traded entities in the CDS market, and peripheral countries like Italy and Spain top the chart in terms of volumes together with Russia, Turkey, Brazil and Mexico. Despite the recent shockwaves sent by the standoff between Greece and its creditors, it is difficult to spot any sign of stress among investors regarding Italy, Portugal or Spain as you can see on the above grapple which graphs Spain’s 5 year risk premium. This CDS widened 15bps yesterday to 101bps, but there was no follow through today and it does not even stand at the widest level of the year. Like the rest of the market, the sovereign compartment seems fairly relaxed about any possible contagion.