Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay
principal on its sovereign debt.
Data from the Portuguese Finance Ministry showed that the country paid less than 300 million euros ($ 368.49 million) in
interest on its sovereign debt between 2016 and 2017 due to the increasingly optimistic views from the ratings agencies.
Bloomberg also said that fund manager Bill Gross raised the amount of insurance the fund
provides on sovereign debt and invested $ 1.3 billion into Italian Treasury bonds linked to inflation.
In the latest report issued by Moody's Investors Service on Wednesday, the internationally famous credit rating agency downgraded its outlook on China's credit rating from «stable» to «negative,» while affirming the still - respectable Aa3
grade on its sovereign debt.
In the case of Greece, and countries like Greece, default
on sovereign debt causes the banking system to fail, which is an existential problem for a modern economy.
Additionally, they may also purchase credit default
swaps on sovereign debt throughout the Eurozone, as insurance against any possible debt defaults.
I predicted an Anglo - American debt - deflationary crisis back in 2003, and am known for my
work on sovereign debt and international finance, including Jubilee 2000.
Sovereign debt securities are subject to risks in addition to those relating to debt and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay
principal on its sovereign debt, or otherwise meet its obligations when due.
@Phil S: I was thinking about the US, UK, Australia, Denmark, Switzerland, Sweden, Germany, Japan and other developed countries that have never
defaulted on their sovereign debt.
And
on sovereign debt they have been inconsistent — calling for faster cuts one day, then decrying the slowing growth that result the next.
Interestingly, Navellier reports that historically markets have done phenomenally well in the month / week / day a major country (read: US) defaulted
on its sovereign debt.
Why can't you default
on sovereign debt?
Governments assess the risks involved in taking sovereign debts since countries that default
on sovereign debts will have difficulty obtaining loans in the future.
Additional risks include exposure to less developed or less efficient trading markets; social, political or economic instability; fluctuations in foreign currencies or currency redenomination; potential for default
on sovereign debt; nationalization or expropriation of assets; settlement, custodial or other operational risks; and less stringent auditing and legal standards.
Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay principal
on its sovereign debt, or otherwise meet its obligations when due.
Do you expect Spain to default
on its sovereign debt?