In case you haven’t heard, everyone’s freaking out over sovereign debt.And it makes perfect sense. Using the 5-year credit default swap spread as a benchmark, one can now check out just how risky some countries have become in recent years. Remember: two years ago, no one in the world would have thought that Dubai would default.
But let’s step back a second.
CMA Vision has put together an excellent presentation on the situation all around the world in various regions. A quick read through this will get you caught up on who is weak and who is strong.
Here's the worst 10 cases of sovereign debt; note how Ukraine's CDS currently takes the cake at nearly 1400 bps!
Here we have the world's safest sovereign debt. The U.S. is doing well but Norway is as safe as it gets.
In Central/South America, risk is declining all around - see the downward trend with all the countries?
Ukraine CDS costs a whopping 14% to insure! This is our bet for the next sovereign default for sure.
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