While politicians and small investors are waiting to discover the assessments that the rating agencies will formulate on Italy, big capital has already begun to move, returning to bet part of their money on the country's default risk. The results can be seen in the most recent trends in 5-year sovereign credit default swaps, with yields growing by more than 22% in a month and prices returning to over 100 basis points (108 to be exact). From a European comparison on the trend of the "sovereign CDS" it clearly emerges that Italy is, in absolute terms, the nation with the highest perception of risk, even worse than Greece, which on the contrary is reaping the benefits of strong austerity and debt restructuring policies, as evidenced by the recent return to investment grade territory by the DBRS agency. A CDS is a financial contract between two parties, in which the buyer pays a periodic annual premium to the seller of the financial product, in exchange for protection against the insolvency of a specific underlying asset, in this case a government bond. It is therefore understandable why through the evolution of these credit derivatives – often identified as protection instruments, but with a highly speculative profile – we can read the perception of country risk by the markets. Which for Italy, as mentioned, is creaking.
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