Monday, January 17, 2011

Why is Egyptian debt suddenly so cheap?

Because you don't want to be holding Egyptian debt when the government falls:
the cost of insuring Egyptian sovereign debt against default rose sharply, with five-year credit default swaps rising 40 basis points to 320 basis points, an 18 month high, according to Markit.

On the other hand, markets often over-react to crises, so this may be a buying opportunity.

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