Romania dropped six places in the top of states with highest risk for debts

Publish date: 13-04-2010
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Romania went down six places in the first three months of the year, being 15th, in a top of the countries according to the degree of risk to debts, after the reduction by 25% of the costs of the Romanian state to ensure the default risk, according to a report of the CMA Data Vision company. CMA analysed the costs for debt insurance against the default risk for 66 states. At the end of last year Romania was present among the first ten states with the highest risk, being the nineth. Credit default swap for bonds with five years maturity in Romania dropped over the first quarter to two percentage points over the mid-swap rate, of 2.763 percentage points over that level at the end of Q4 of 2009.

Thus, the insurance of a debt of ten million dollars, with maturity of five years of the Romanian state dropped at the end of March at 200,000 dollars, from 276,300 dollars in December, CMA says in the report Global Sovereign Credit Risk Report for Q1.The cumulative probability of default for debt of Romania dropped from 17.2% in December 2009 to 13.3% in March.

The top ten of states with highest risk Lithuania, Lebanon and Romania were replaced by Pakistan, Egypt and Iraq. Venezuela was left on the first position of the top for Q1 of 2010 followed by Argentina, Pakistan, Ukraine, Iraq, Dubai, Iceland, Latvia, Greece and Egypt. Pakistan and Iraq were not included in the report for Q4 2009 while Egypt went up from 11 to 10.

Emerging Europe was among the regions with the best evolution in Q4, according to CMA.
Estonia recorded the most significant drop of 50.9% followed by Ukraine, with 49.3% and Latvia with 33,3% Hungary, Bulgaria and Romania had similar performances for Q1 in 2010 similarly to Slovakia, Slovenia or the Czech Republic. In Central Europe and Eastern Europe, Bulgaria is situated 16th, with costs of 193,200 dollars for the insurance of a debt of 10 million dollars, followed by Hungary on 18th with 181,500 dollars. Poland and the Czech Republic occupy 40th and 48th, the insurance of a similar debt being 96,500 dollars, 68,600 dollars respectively.

The surest state was for Q1 2010 Norway, with a cost of insurance against default of 17,300 dollars, followed by Finland with 23,000 dollars and Germany with 31,600 dollars. Compared to the end of 2009, Germany and Finland changed places. Romania had at the end of 2009 a public debt of 11,97 billion euro, up by 32,6% against the previous year. The public direct debt includes foreign loans signed directly by the ministry of public finances and the authorities of the public administration on the basis of the legislation regarding public debt as well as those regarding the ratification of the agreement between Romania and the IMF.

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