VIDEO & AUDIO Sovereign credit default swaps are a form of insurance against a government defaulting on its debt. Their prices are usually steady in normal circumstances because the risk of a government’s debt is considered stable. But in recent months sovereign CDS spreads widened sharply, particularly in emerging markets, reflecting growing fears as government rescues of financial institutions became commonplace; several countries sought bail-outs from the International Monetary Fund, and many countries showed signs of economic slowdown.
In this chart we track the sovereign CDS spreads in 16 countries over the past two years.
