CDS: Spike Not Concerning Over Long Term

Spreads on Latin American sovereign credit default swaps (CDS) have spiked following the devastating Japanese earthquake on March 11, in line with a dramatic uptick in risk aversion in global financial markets. Over the near term regional CDS could head higher, as the full scale of the earthquake's impact and associated nuclear disaster is as yet unknown, and its impact on Latin American macroeconomic trajectory is uncertain.

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