That’s Portugal’s sovereign CDS curve and it has inverted — indicating that the market now believes there’s a higher probability of a default in the short-term than in the longer term. Or at least, they’re paying more for short-term protection against Portuguese debt defaulting than for longer-term.
FT Alphaville readers will remember that Greece’s curve inverted almost three weeks ago. Portugal had been flattening for some time, Spain’s CDS term structure meanwhile, remains stubbornly upwards-sloping.
Source: FT ALPHAVILLE
Tue, 08:18 09-02-2010