Wall Street Journal
February 1, 2011
A reminder of how far Western Europe has fallen from grace: Even with huge protests making regime change in Egypt likely, debt investors still think it is far less risky than Greece. At least that is the message from the credit-default-swap market. As of Monday night, it cost $835,000 a year to insure $10 million of Greek debt against default, according to Markit. For Egypt, it still costs only $440,000. Oil-rich Middle Eastern countries Saudi Arabia and Qatar still are way down at $120,000 and $106,000 respectively.
While outwardly surprising, it makes sense. Egypt, while riddled with uncertainty, doesn't necessarily look on a road to default. Greece is a different story. While policy makers in Davos, Switzerland, for the World Economic Forum were consistent in playing down the risk of a sovereign default, many market participants believe it is a question of when, not if. As one chairman of a major bank said about Greece: "They must be smoking dope if they think they are going to pay back the debt."
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