On Monday we highlighted the recent spikes in default risk for some of the problematic European countries. So what has default risk for states done recently? We were able to track down 5-year CDS prices for 16 states, and we highlight their current prices in the table below. While California probably comes to mind as the state that's in the most trouble, Illinois actually has the highest default risk according to investors. To insure $10,000 worth of Illinois debt for 5 years, a buyer would have to pay $291.30 per year. The cost for California is only slightly lower at $287.20. Michigan ranks third, followed by New Jersey, New York, Nevada, and then Florida. Of the 16 states that we found CDS prices for, Texas, Virginia, Maryland, and Delaware have the lowest risk of default. (more)
Friday, December 3, 2010
State Default Risk Levels
On Monday we highlighted the recent spikes in default risk for some of the problematic European countries. So what has default risk for states done recently? We were able to track down 5-year CDS prices for 16 states, and we highlight their current prices in the table below. While California probably comes to mind as the state that's in the most trouble, Illinois actually has the highest default risk according to investors. To insure $10,000 worth of Illinois debt for 5 years, a buyer would have to pay $291.30 per year. The cost for California is only slightly lower at $287.20. Michigan ranks third, followed by New Jersey, New York, Nevada, and then Florida. Of the 16 states that we found CDS prices for, Texas, Virginia, Maryland, and Delaware have the lowest risk of default. (more)
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