MercoPress. South Atlantic News Agency

Venezuela and Argentina have riskiest sovereign credit, says default-swap monitor

Argentina moved from third to second place

Venezuela is catalogued to be the world's riskiest sovereign credit, followed by Argentina, in the table of countries whose debt is the costliest to insure, credit default swap monitor CDS DataVision said this week.

CMA's quarterly survey of credit default swaps, which are used to insure against restructuring or default of debt, found Venezuela's debt insurance costs continue to be the highest after it outstripped Ukraine in December.

However, no sovereign CDS are trading above 1,000 basis points -- typically an indicator of distressed debt -- for the first time since the start of the global financial crisis.

Venezuela devalued its currency in January and inflation is running around 25%. Venezuela's CDS are close to 950 bps, meaning it costs 950,000 US dollars a year for five years to insure 10 million USD of sovereign debt. Overall, however, investors are showing increasing confidence in sovereigns' ability to repay debt as the world comes out of recession.

Argentina has moved into second place in the riskiest debt table from third, after delays to the country's planned restructuring of 20 billion USD in debt, with CDS around 900 bps. Pakistan, whose five-year CDS are quoted at 791 bps, is in third.

Greece, the only Euro zone member among the world's 10 riskiest, moved into ninth place from tenth, with CDS around 335 bps -- one place above Egypt.

The Euro zone last month agreed a financial safety net for Greece, together with the International Monetary Fund.

The CDS of Euro zone countries Portugal, France, Germany and Greece have shown the sharpest rise in percentage terms over the last quarter.

However, Germany continues to have the world's third safest sovereign debt at 31.6 bps, according to CMA data. Norway tops the list of safest debt with CDS of 17.3 bps, and Euro zone member Finland is second at 23. The United States is 10th at 41.1 bps.