Saudi Arabia’s default risk rose to a maximum of 6 years
Ahmed Namatalla and Abigail Moses
(Bloomberg) – Investors who want to hedge against default on the debt of Saudi Arabia, will have to pay the same price as the bonds of Portugal, whose credit rating and five years after the receipt of the international financial assistance is garbage.
Credit default swaps of the kingdom over the past 12 months have risen in price more than doubled on Thursday reached the highest level since April 2009 190 basis points, according to CMA tracked by Bloomberg data. This is almost equal to the value of contracts on debt of Portugal, whose credit rating at seven steps below investment grade Aa3, assigned to the Saudi agency Moody’s Investors Service Arabia. On Monday, the credit default swaps of the Arab states were trading at 185 basis points.
The financial position of Saudi Arabia hampered the conduct of the war in Yemen in terms of oil prices falling to its lowest level in nearly 12 years. The state, whose budget depends on energy exports by 70 per cent, last year for the first time placed state bonds in 2007 to cover the budget deficit, which could be increased to a maximum of 1991.
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