CDS: Argentina & Venezuela To Underperform

Even at current high levels, there is little incentive to sell protection on Argentine and Venezuelan debt via 5-Year Credit Default Swaps (CDS), in our view. Both contracts are fairly priced, and could even push higher over the coming months given the associated risks. In Argentina, a lack of policy consensus in the upper reaches of government, and broad-based weakness across the soft commodities complex, warrant concern. In Venezuela, meanwhile, heightened 'Chávez risk' ahead of November's regional elections could keep investors on the sidelines.

To read the full article, please choose one of the following options: