A number of emerging markets sovereign CDS spreads have tightened to the pre-crisis levels. The recession has been discounted completely. Part of the reason is that numerous investors bought sovereign protection in late 08/early 09. Recently they have all been getting out, forcing a sharp tightening. Here is Brazil and Colombia (some of the stronger EMG names):
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyW_DXcaJEnnKRLCvNpoRjqDkvgO9k_yOboOe6Tcv3cN1ewgjJN02EoghgphdU37rMBrAMkqQ_jd3o7o0REBrEYf0NZJ6-4PjylC5wysqISruLdBmzu5yd2Jh_ghFzqkjBMS7waRF7rIID/s400/Brazil+Colombia.png)
Philippines, Indonesia, and Turkey:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFwsGthOaCkb18StRTfisxwroS2vXduwAHhHNItAqMZQsJng1YVMAUJDzPD3S7pa2JZNCjGslitz8ba4b7B4ZedJZ-Sk6O1qoR5AVefQI_t3fi2bUl2qC7REthHECVS9MuVYn4ZsbwZDyd/s400/Philippines+Indonesia.png)
The oil producing nations Mexico and Russia are still at elevated levels relative to the pre-crisis period, although Mexico is barely above. A jump in oil prices may tighten these some more.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8LNDwM4ejzTZK2Cs9S3Q6RM7TJ5fz4_PwiabBwF-MsEtCHBZr7Rwx9_MmIo2qvZ1WBViiNA-3sFt2KLNsDO1EwrMXHO-jTUxIx7odtqiz5Vbv_AqyPEmnNLAOCJiiIaMSJvPuROTxpuIU/s400/Mexico+Russia.png)
Argentina and the Ukraine continue to trade at distressed levels.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-VAwpW9R_ef9KKxDuQvRg0ip-xtDc_UBs34DlGRqadiIODk_HW0UX0rSsx7b8ceK9O1N8N2ld0XEzzQnToqxV6Dr1un00D_VNXr6xckwm6wahfENDClc2DCqpc59-WYXApO1kq7hvE24a/s400/Argentina+ukraine.png)
As a comparison here is the US sovereign CDS spread - protection agains the default in Treasury bonds. Interestingly enough it still trades above the pre-crisis levels.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJyRnU5HpxHJBwBaMPu07RQZfX2VXGTNAZi3CDSl4S8emOZ0ZiNR0cEUOKJUR_TT3EPhYaf83FiNWtNfb1tGzPYz19iYdk2NAnQZhhEKLQ7FhxKtoiNXicMTv64H8T8TXNTH7QzEoFea4E/s400/US+CDS.png)