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So the risk is assessed on Swedish companies 
Industry 5-year CDSs (cost, expressed in basis points)
ABB 83
Assa Abloy 79
Atlas Copco 79
Electrolux 92
SCA 118
Scania 131
Securitas 122
SKF 81
Swedish Match 90
The Volvo 284
Ericsson 121
Nokia 322
Telenor 87
TeliaSonera 81
Handelsbanken 153
Nordea 167
SEB 201
Swedbank 199
Source: Markit

The health of Swedish companies: SAS bankruptcy risk -78 percent
Monday, 16 January 2012
It had been extremely expensive to insure against that Scandinavian airlines, SAS would not default on its payments. According to Bloomberg market pricing, it implies that there is as much as 78 per cent risk that SAS would default on its payments.
Anyone who lends money to companies by buying corporate bonds can also take the opportunity to buy so-called credit default swaps, or CDSs as they are also known, in order to insure against any payment defaults.
Corporate bonds are lifted sometimes presented as an alternative to equities, especially when the return on shares is low.

But the high yields also associated with high risks are evident in the airline SAS. According to Bloomberg, it costs at the moment Skr3.6 million, plus 500,000 euros a year to insure bonds for 10 million euros for SAS for five years.

CDS price shows the market'sassessment of both the degree of risk that the payment is set, and how much the market expects to be back if it happens that the so-called recovery value is attained.
Translated to the level of risk that SAS defaults its payments, according to Bloomberg at a staggering 78 percent. This allows SAS to be the riskiest of all airline where  are CDSs are issued.
"There is still considerable uncertainty in SAS and there is an increased fear for its sustainability as a standalone company in the long run, "says SEB's senior analyst Henry Blymke according to Bloomberg.

The vast majority of Swedish companies with outstanding bonds are otherwise a pretty good credit rating and traded at levels that suggest very low probability of default.

Expressed in basis points is SAS CDS of 1826 bp according to the information specialist Markit. This means that anyone who wants to insure its bonds against default has to pay more than 18 percent of the bond's value in insurance premiums each year. It far exceeds the levels that the major Swedish banks' CDSs are traded on. According to Markit, they are between 153 and 201 bp.

Looking at the Swedish government's stock portfolio, SAS stands out there as well. Nordea CDSs is located at 167 bp, and Telia Sonera on 81 in its 5-year CDS. For the unlisted Vattenfall its price is equal to 87 points.

To find companies that play in the same league as SAS one must instead turn abroad, specifically to Greece. CDSs for the telecommunications company, Hellenic Telecom is trading at 2676 points. In Scandinavia, the Finnish paper company M-Real's corporate bonds in addition to SAS bonds is seen as a major risk. Crisis-hit bank Dexia bonds are traded according to Markit 847 bp.
By Scancomark.se Team

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