Romania, 16th position in high-risk debt ranking

The markets include Romania’s sovereign debt among the world’s highest risk debts. Credit default swaps (CDS) for the Romanian state’s debt were on the rise at the end of the year, pushing Romania on the 16th position in the ranking of countries with high-risk debts, reports.

CDS for the Romanian state’s five years’ sovereign bonds rose from 4.2 pc in the third quarter of 2011 to 4.45 pc, according to a study of the financial monitoring company CMA. More explicitly, the rising credit default swap translates into a hike of the default-risk cost for Romania’s USD 10M-debt from USD 420,000 to USD 445,000. At the same time, the CDS ratio has an important impact on the interest rates investors request for loans to the state. The cumulative odds for a default in Romania’s case rose from 26.2 pc in the third quarter of 2011 to 27.3 pc in Q4, the CMA report further shows. Greece remains in the top position of the ranking, which it held throughout 2011, with the highest risk of default.

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