Ireland's Gov't debt now rated riskiest in Europe

Fri, Jan 30, 2009, 00:00

Ireland’s government debt has become the riskiest in the euro zone, surpassing Greece’s sovereign bonds, according to credit-default swap prices.

Contracts on Ireland rose to 269, according to CMA Datavision prices, while credit-default swaps on Greece’s debt fell to 248.2 at 5pm.

The cost to hedge against losses on Irish debt is now more than Chile, the Czech Republic, Israel, Malaysia, Saudi Arabia, Thailand and China, the CMA prices showed.

Iceland retains the riskiest debt ratings with contracts on its government debt at 995.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company or country fail to adhere to its debt agreements.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

Additional reporting Bloomberg