The 21 Countries Most Likely To Default

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Violence in the Middle East and the crisis in Europe have led investors to doubt the very stability of sovereign debt around the world. And while this worry has been front and centre in the minds of market participants for some time, the world is now waking up to the very real possibility that a Western nation may default.In Q1 2011, it wasn’t just about the crisis in Europe, however. The Middle East, where protest movements crushed governments and crippled oil markets, has also seen default risks rise.

What’s clear from CMA’s quarterly list is that markets are now confident Ireland, Portugal, and Greece will likely see their sovereign debt restructured in someway by the eurozone’s new provisions taking effect in 2013. And they are concerned some economies in the Middle East may not be able to withstand the current wave of revolution facing the region.

CMA‘s list is ranked by CPD, or cumulative probability of default. This rating is separate from a company’s CDS, but is closely related, and based on the volatility and price of that product.

#21 Italy

Cumulative Probability of Default: 12.5%

Current 5-year Mid CDS (bps): 149.5

Source: CMA Datavision

#20 Bulgaria

Cumulative Probability of Default: 13.5%

Current 5-year Mid CDS (bps): 203.1

Source: CMA Datavision

#19 India

Cumulative Probability of Default: 13.7%

Current 5-year Mid CDS (bps): 161.8

Source: CMA Datavision

Note, this is a proxy rating in India's debt.

#18 Lithuania

Cumulative Probability of Default: 14.5%

Current 5-year Mid CDS (bps): 219

Source: CMA Datavision

#17 Latvia

Cumulative Probability of Default: 15.0%

Current 5-year Mid CDS (bps): 227.8

Source: CMA Datavision

#16 Romania

Cumulative Probability of Default: 15.3%

Current 5-year Mid CDS (bps): 231.1

Source: CMA Datavision

#15 Croatia

Cumulative Probability of Default: 15.5%

Current 5-year Mid CDS (bps): 236.4

Source: CMA Datavision

#14 Hungary

Cumulative Probability of Default: 16.7%

Current 5-year Mid CDS (bps): 254.0

Source: CMA Datavision

#13 Spain

Cumulative Probability of Default: 18.9%

Current 5-year Mid CDS (bps): 233.1

Source: CMA Datavision

#12 Vietnam

Cumulative Probability of Default: 20.3%

Current 5-year Mid CDS (bps): 316.1

Source: CMA Datavision

#11 Bahrain

Cumulative Probability of Default: 20.3%

Current 5-year Mid CDS (bps): 315.3

Source: CMA Datavision

#10 Egypt

Cumulative Probability of Default: 21.1%

Current 5-year Mid CDS (bps): 331.0

Source: CMA Datavision

#9 Iraq

Cumulative Probability of Default: 21.1%

Current 5-year Mid CDS (bps): 330.6

Source: CMA Datavision

#8 Lebanon

Cumulative Probability of Default: 21.9%

Current 5-year Mid CDS (bps): 345

Source: CMA Datavision

#7 Dubai

Cumulative Probability of Default: 24.7%

Current 5-year Mid CDS (bps): 402.7

Source: CMA Datavision

#6 Ukraine

Cumulative Probability of Default: 27.7%

Current 5-year Mid CDS (bps): 445

Source: CMA Datavision

#5 Argentina

Cumulative Probability of Default: 34.7%

Current 5-year Mid CDS (bps): 584

Source: CMA Datavision

#4 Portugal

Cumulative Probability of Default: 40.1%

Current 5-year Mid CDS (bps): 578.6

Source: CMA Datavision

#3 Ireland

Cumulative Probability of Default: 43.0%

Current 5-year Mid CDS (bps): 656.9

Source: CMA Datavision

#2 Venezuela

Cumulative Probability of Default: 51.8%

Current 5-year Mid CDS (bps): 1008.9

Source: CMA Datavision

#1 Greece

Cumulative Probability of Default: 57.7%

Current 5-year Mid CDS (bps): 1037.2

Source: CMA Datavision

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