Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26% in the past month as the region’s crisis flared up.
'If these implied defaults come vaguely close to being realised then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years', the analysts in London said. 'Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally'.
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