Sovereign CDS markets unworried in early trading

Protests continued, but Middle East and north African government risk largely unchanged

Unrest continues in North Africa

Credit default swaps (CDS) on government debt around the Mediterranean remained largely unchanged by 1:00 pm UK time today, according to market information provider Markit, despite continuing anti-government protests in Cairo's Tahrir Square.

Protesters seem now to be settled in for the long haul, but there are signs the Egyptian economy is adapting; banks have reopened and the stock exchange is set to resume trading on Sunday, February 13. Egyptian CDS speads dropped three basis points today from a close of 343bp yesterday. Elsewhere in the Arab world, spreads on the Central Bank of Tunisia fell four basis points to 171bp, Lebanon was down five basis points to 350bp, Qatar fell three to 97bp, Saudi Arabia tightened five to 108bp and Bahrain was trading five basis points tighter at 230bp. While other nations in the region have seen protests, following the lead of Tunisia and Egypt, none has reached the same level of disruption.

In Europe, CDS spreads on UK debt tightened from 61bp to 59bp, now 15bp below the 2011 peak of 74bp on January 10. Among the peripheral eurozone nations, Greece was trading at 809bp, down from a close yesterday of 852bp. Ireland also tightened slightly to 559bp from 568bp, but the others were more or less unchanged: Portugal was steady at 417bp and Italy at 170bp, while Spain widened two basis points to 231bp.