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Thursday, April 12, 2012

Quick Look at CDS Rates

From Bloomberg (links available on the economic data page of the new website.)

Spain is the scariest one.  Check out the rise over the past five years... and remember our post about derivatives exposure the other day [see: The Wipeout Ratio.]  These are exactly the sort of instruments constituting the $240 Trillion in derivatives at merely the top five banks.

And, the rest...


  1. Thanks PW.  Somehow, can you elaborate what those CDS numbers mean?   (I assume a high number is bad. A higher number is really bad)  Portugal and Ukraine are extremely high.  But their economies are small, compared to other European countries.  What is the CDS for US? (or US does not need one)

  2.  Yep, high is bad.  It's the cost of a credit default swap for the indicated time period.  So, nearly 500 basis points to insure against a default by Spain for 5 years.   The US, which was as high as 68 bps last July, is at 29 now.

    BTW, I know Portugal and Ukraine are relatively small, but remember the Greece problem?  Contagion comes in lots of different flavors: