Monday, June 29, 2009

Markit Launches Industrialized Nation CDS Indices

In a press release today, data provider extraordinaire Markit announced the creation of several new CDS indices, including our favorite, the Markit iTraxx Sovx G7, which purports to track the "credit risk of the most industrialised countries in the world". Highlights from the press release include the following:

"Historically, the trading of sovereign CDS was limited to emerging markets, reflecting the credit risk associated with the government debt of these countries. However, an actively traded CDS market in industrialised sovereigns has now emerged as a result of the financial crisis and growing investor concerns relating to the solvency of developed economies."

The best thing about this index is the fact that developed nations will be forced to acknowledge the structural deficiencies of their customary fiscal behavior. Ideally, this data would be streamed live into legislative body's voting chambers around the developed world, forcing these folks to at least recognize that profligacy has it's consequences.
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