Tags: uk | debt | risk | mcdonalds

UK Debt Now Riskier Than McDonald's

By    |   Tuesday, 16 Dec 2008 09:40 AM

Based on their respective prices in the credit-default swap market, British government debt now carries almost twice the investment risk of McDonald's corporate bonds.

McDonald’s global sales rose 7.7 percent last month. Debt for the UK is set to reach £1 trillion over the next two years, double the country’s debt of a year ago.

"Talking about McBritain is an insult to Ronald's outfit," Diapason Commodities investment strategist Sean Corrigan told Bloomberg.

Britain risks being lumped in with perennial debtor nations in developing regions, Corrigan says.

The cost of protecting against a decline in Britain’s creditworthiness escalated when the pound suffered its biggest one-day loss against the dollar in 16 years in September, following the British government’s takeover of the country’s biggest lender to landlords.

British banking shares tanked last week after investors learned that bad debt charges for huge British lender HBOS had soared to $7.5 billion.

The British pound fell below parity with the euro last week as consumers exchanged pounds for euros, putting additional pressure on the currency.

According to CMA Datavision, Norway is the country least likely to default on its sovereign debt in the next five years (3 percent risk), and the most likely is Ecuador (93 percent).

The risk of a default by the United States is six percent. Norway, Japan, Germany, France and Finland are more stable, by the data provider’s model.

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Based on their respective prices in the credit-default swap market, British government debt now carries almost twice the investment risk of McDonald's corporate bonds.McDonald’s global sales rose 7.7 percent last month. Debt for the UK is set to reach £1 trillion over the...
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Tuesday, 16 Dec 2008 09:40 AM
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