Greek Crisis Highlights Turkey's Strength

For the first time in history, the market views Greece's sovereign debt risk as higher than Turkey's. Turkish sovereign credit-default-swap (CDS) spreads—a proxy for risk expressed as an interest-rate premium over the London Interbank Offered Rate (Libor)—are 165 basis points (1.65%), while those for Greece are much higher, at 330 basis points (3.3%). That puts Turkey ahead of a handful of other European Union member states, as well: Sovereign CDS spreads for Romania are trading at 200 basis points (bps), Bulgaria at 190 bps, and Hungary at 185 bps.

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