Dubai’s economic meltdown was a warning sign of further sovereign default troubles for other governments.
CMA, a credit information specialist, tracks the world’s most volatile sovereign debt issuers according to percentage changes in their 5 year Credit Default Swaps.
On top of their list for the greatest sovereign risks are countries from the former Russian Eastern Bloc, conflict-torn nations, and an oil-rich dictatorship.
Cumulative Probability of Default: 17 %
Reuters: 'Lebanon, one of the most heavily indebted states in the world, completed a debt swap in March for around $2.3 billion of foreign currency paper maturing this year.
Strong economic growth has helped reduce Lebanon's ratio of debt to gross domestic product to 153 per cent in June from around 180 per cent three years ago. The country's gross debt stands at $48 billion.'
Cumulative Probability of Default: 18 %
The Sacramento Bee: 'Just how deeply in debt are our state and local governments?
The answer: No one knows for certain, since debt is scattered through myriad agencies in many forms, but well over a half-trillion dollars is a fair estimate.'
Cumulative Probability of Default: 19 %
Bloomberg: 'Lithuania will probably miss a 2011 European Union deadline to bring its deficit in line with the bloc's budget threshold, ruling out euro adoption before 2013, Finance Minister Ingrida Simonyte said..
The former Soviet state's budget shortfall will swell to 9.8 per cent of gross domestic product this year, and narrow to 9.7 per cent in 2011'
Cumulative Probability of Default: 23%
Bloomberg: 'Iceland's economy contracted the most on record last quarter after the island's banking failure left locals poorer and as businesses lacked funds for investment.
Gross domestic product shrank an annual 7.2 per cent, after contracting a revised 6.2 per cent in three months through June, Reykjavik-based Statistics Iceland said on its Web site. From the previous quarter, GDP shrank 5.7 per cent.'
Iceland's banking collapse last year plunged the Atlantic island into its worst economic decline since gaining independence from Denmark in 1944 and forced the government to seek an international bailout to avert default. '
Cumulative Probability of Default: 30%
Bloomberg: 'Latvia's economy contracted a preliminary 18.4 per cent in the third quarter, the biggest decline in the EU. The country's banks may have the highest need for new capital in eastern and central Europe along with Lithuania because they rely on collateral that's been falling in value amid house price declines, Fitch Ratings said in a report today...
The country is rated two levels below investment grade at BB by Standard & Poor's. Moody's Investors Service ranks Latvia at the lowest investment-grade level of Baa3.'
Photo: Lithuanian Holidays
Cumulative Probability of Default: 49%
WSJ: 'Fitch Ratings said Argentina's credit ratings are likely to remain in highly speculative territory even if its planned $20 billion debt exchange is executed successfully, noting the country's continuing economic and financial pressures as well as high debt ratios.
Argentina's Senate voted to approve a bill that would allow the government to reopen a 2005 debt restructuring. At issue are about $20 billion in face value of bonds that weren't included in a 2005 transaction. Economy Minister Amado Boudou said recently that the government plans to reopen the offer under similar terms to try to attract as many of those investors as possible.'
Photo: Argentina's coach Diego Maradona (AP)
Cumulative Probability of Default: 60%
WSJ: 'one week ago, the government was forced to begin shutting down seven small banks that together represent up to 12% of banking system deposits, after the public began to get wind of some of the banks allegedly using depositors' funds for corrupt ends.
Those takeovers alone would have frayed nerves in financial markets. But Chavez piled on by saying he would nationalize the entire banking system if needed. The comments, last Wednesday, sent Venezuela's bolivar currency and sovereign bond prices tumbling.'
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