State Default Risk and a Comparison to Sovereign Debt
Thursday, July 1, 2010 at 09:57AM Below we highlight a Bloomberg chart of 5-year CDS (credit default swap) prices for the four states that seem to be at most risk of default -- California, Illinois, New Jersey, and New York. (Make sure to take note that the four prices are all on a different axis.) As shown, all four have spiked significantly recently, but just one -- Illinois -- has blown out to new highs versus the late 2008 spike. Illinois also has the highest risk of default of all four states, which is probably surprising to most. The fact that these are anywhere close to their 2008 highs is not a good sign considering things have supposedly gotten better since then.
Chart from Bloomberg LP
Below we have included the CDS prices of these four states in our table of sovereign debt CDS prices that we post from time to time. All four states are closer to the top of the list than the bottom in terms of default risk. As noted earlier, Illinois has the highest default risk at 368.6 bps. The state sits between Dubai and Bulgaria. California ranks second out of the four at 352.9 bps, while New York and New Jersey are both right around the 290 bp level. Illinois and California are both at higher risk than Portugal, while all four are in a worse situation than Spain. In terms of year-to-date change, Illinois default risk is up 117%, New York and New Jersey are both up about 87%, and California is up 35%.
Down in Washington, they're working on a bill right now that tries to get rid of too big to fail for financial firms. One has to wonder if they're putting any thought into the states. With the public so against any form of bailout at the moment, the states would be wise to not count on help from the federal level.
Reader Comments (2)
I can't understand one thing - as far as I know US cannot technically default, so what;s the rationale behind quoting their debt CDS?
ed hardy
Christian Audigier caps
ed hardy men hoody
ed hardy women hoody
ed hardy bags
ed hardy swimsuit
ed hardy suit
ed hardy caps
ed hardy belt
ed hardy slipper
ed hardy sunglasses
ed hardy man underwear
ed hardy Womens Bottoms
ed hardy man denim
ed hardy man trunk
ed hardy man shoes
ed hardy women shoes
ed hardy stoup
ed hardy jewelry
ed hardy mobile face
ed hardy mug
ed hardy man tops
ed hardy man shirt
ed hardy women scarves
ed hardy women polo
ed hardy women pants
ed hardy women denim
ed hardy man pants
ed hardy man swimsuit
ed hardy man loungewear
ed women mid pants
ed women sport pants
ed hardy wallet
ed hardy mousepad
ed hardy mini skirt
ed hardy women short
ed Short sleeve mens shirts
ed Short sleeve Womens shirts
ed Long sleeve mens shirts
ed Long sleeve womens shirts
ed hardy men hoody
ed hardy women hoody
ed hardy bags
ed hardy suit
ed hardy swimsuit
ed hardy belt
ed hardy caps
ed hardy slipper
ed hardy sunglasses
ed hardy man underwear
ed hardy Womens Bottoms
ed hardy man denim
ed hardy man trunk
ed hardy man shoes
ed hardy women shoes
ed hardy stoup
ed hardy jewelry
ed hardy mobile face
ed hardy mug
ed hardy man tops
ed hardy man shirt
ed hardy women scarves
ed hardy women polo
ed hardy women pants
ed women sport pants
ed hardy wallet
ed hardy mousepad
ed hardy mini skirt
ed hardy women short
ed hardy women sport tank
ed Short sleeve men shirts
ed Short sleeve Women shirts
ed Long sleeve men shirts
ed Long sleeve women shirts
ed hardy men hoody
ed hardy bags
ed hardy swimsuit
ed hardy suit
ed hardy caps
ed hardy belt
ed hardy slipper
ed hardy sunglasses
ed hardy man underwear
ed hardy Womens Bottoms
ed hardy man denim
ed hardy man trunk
ed hardy men shoes
ed hardy women shoes
ed hardy stoup
ed hardy jewelry
ed hardy mobile face
ed hardy mug
ed hardy man tops
ed hardy man shirt
ed hardy women scarves
ed hardy women polo
ed hardy women pants
ed hardy man swimsuit
ed hardy man loungewear
ed women mid pants
ed hardy wallet
ed hardy mousepad
ed hardy mini skirt
ed hardy women short
Tiffany Necklaces
Tiffany charms
Tiffany Bracelets
Tiffany Pendants
Tiffany Earrings
Tiffany Rings
Tiffany Accessories
Tiffany Sets