Credit risk rises for Gulf crude exporters on virus fears - Reuters:
The cost of insuring against sovereign debt defaults by Gulf Arab states has risen in recent days as markets price the risk the coronavirus outbreak represents for the crude export-dependent region.
Conventional spreads on the five-year credit default swaps (CDS) of Bahrain and Oman were up four and seven basis points respectively on Tuesday compared to their close last week, according to IHS Markit, while those for Saudi Arabia and Dubai have risen 5 and 3 points respectively.
The rise, though not huge, reflected risk-off sentiment in debt markets which could translate into further weakness in coming days, fund managers said.
“We haven’t seen a sell off in regional bonds but the overall emerging markets sentiment is heavy because of the virus outbreak,” said Zeina Rizk, executive fixed income director at Arqaam Capital, adding that it was normal for CDS to move before bonds.
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