Why has the cost of insuring Venezuela’s debt rocketed?

  • The cost of insuring debt is measured by the Credit Default Swap (CDS) rate, which for Venezuela has rocketed in recent weeks, making its debt the most expensive in the world to insure.
  • Happened because Venezuela is one of world's major oil producers, and probably the most vulnerable to oil price falls, since oil = approx. 95% of export revenues.
  • Occuring in context of very weak economy (weakening currency, high inflation, slow growth), and thus markets expect Venezuela to default on it's debt.
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