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Turkey Trips Credit-Market Alarm as Sovereign CDS Curve Inverts

  • Cost of one-year default protection surpasses five-year prices
  • Stand-off with U.S. has sent Turkish lira tumbling this month
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Turkey’s financial turbulence has triggered a credit-market warning light.

The price of one-year protection against a sovereign default has jumped above the annual cost of five-year insurance, according to CMA credit-default swap data. So-called CDS inversions usually only happen to deeply distressed corporate borrowers teetering on the brink of collapse.