5-Year CDS: Next Move Hangs On Political Risk

May 2008 | Market Strategy

The Serbian 5-Year credit default swap (CDS) remains in the trend channel which has been in play since the start of the year, trading at 259bps on May 27. Given the close correlation between the derivative's movement and political risk levels, we expect the CDS to remain trading in this band until the uncertainty surrounding the parliamentary election of May 11 is removed, and a governing coalition is formed.

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