The spike in Saudi debt insurance | beyondbrics – FT.com

The cost of insuring against a default on Saudi Arabian debt spiked sharply as Egypt’s Jasmine Revolution got underway in late January and has since climbed even higher (see chart after the break). Does this suggest investors believe trouble could spread to the world’s biggest oil-producing nation?

Probably not. As Marios Maratheftis, head of research at Standard Chartered in Dubai, told beyondbrics, it suggests instead that they are expressing concern over recent events in one of the few ways open to them – and this fails to reflect Saudi moves to address some of the structural problems fuelling unrest elsewhere.

The cost of insuring $10m of Saudi debt for five years jumped from $75,000 at the end of January to about $138,600 on Wednesday (having peaked at about $142,800 on February 21).