Global risk perception improves – Standard Chartered

The market perception of risk across countries has broadly improved over the past year, which reflects ‘market-friendly’ outcomes of disruptive elections that were seen as potentially disruptive, along with improving global growth, explains Philippe Dauba-Pantanacce, Senior Economist at Standard Chartered.

Key Quotes

“Our analysis of 5Y CDS spreads shows an improvement (or tightening) in about 90% of the countries in our sample since our previous update in May 2017. This is a continuation of the trend we observed last year. Relative 5Y CDS spread movements provide a gauge of how markets perceive the evolution of risks.”

“The list of countries perceived as riskiest from a market default perspective has barely changed in the past year: the ‘bottom 10’ (those with the widest spreads) still include Greece, Ukraine, Iraq, Lebanon, Nigeria, Egypt, Pakistan, Turkey, Bahrain and Brazil, although their rankings have shifted slightly. Venezuela no longer appears after being declared in technical default on its obligations in late 2017, which triggered its CDS.”