Economics
Default Swaps Lift Sovereign Ratings From Brink of Junk
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The risk of owning sovereign bonds has fallen to a two-year low, setting the stage for more gains by the riskiest government securities as the investors look to a healing world economy.
The amount of risk priced into government issues is the least since 2011, lifting the average implied ratings for more than 80 debt markets to Baa2 from Baa3, or one step above junk, according to Moody’s Analytics. Credit-default swaps show the securities to be safer after more than $5 trillion in stimulus by the world’s central banks since 2009, according to data compiled by Bloomberg and Bianco Research LLC.