Not Convinced By Yield Compression

Investors may have forgotten about Venezuela's grim long-term debt outlook (see our online service, June 13 2011, 'Investors Aware Of Long-Term Risks') and are instead focusing on the probability of Venezuelan President Hugo Chávez stepping down. Indeed, the recent rally in the Venezuelan US$ 2027 sovereign bond and the compression of Venezuelan USD CDS yields appear to be the result of mixed reports about the Chávez's health. The lack of information provided by government officials has led to speculation regarding the president's health, with theories ranging from Chávez having prostate cancer to the whole issue just being a ploy to

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