US May Fall Off Safest Soverign Debt Risk List

The safest sovereign debt investment in the world is Norway’s bonds. Finland, Germany, and Sweden also receive good ratings in the latest version of the CMA Sovereign Debt Report for the first quarter. CMA is part of the CME Group, experts in debt evaluation.

What should be troubling for investors in US debt is that American debt is at the bottom of the list of ten measuring “The World’s Safest Sovereign Debt” Two other large world economies closely allied with the US, the UK and Japan, do not make the list at all. US debt dropped three places from an earlier report, more than any other company in the top ten.

The CMA list, which appears to support the comments of ratings agencies like S&P, shows how quickly the risk of debt in once financially stable economies like the US have dropped. The concerns are simple and have been stated many times before. The US, UK, and Japan carry national debt loads which are a high ratio to GDP and their deficits are rising as their rate of economic growth slows. Ben Bernanke recently said the US must begin to focus on its debt problems now or risk harsh consequences later because the American population is aging and the burden on Social Security and Medicare will only grow.

A look at the bottom of the CMA list also confirms the suspicions of traders in sovereign debt. Greece is number nine on the list “The World’s Riskiest Sovereign Debt” It is not surprising that paper issued Dubai, Pakistan, and Iceland are considered even more risky.

Douglas A. McIntyre