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Saudi CDS Soars To 6 Year Highs
This weekend we saw an important action in the downgrade of Saudi Arabia, highlighting just how far the EM crisis has carried. As Ice Farm Capital's Michael Green notes, in response, Saudi CDS continues to climb, reaching its highest since 2009 (amid both default risk and devaluation concerns).
Now clearly Saudi’s distress is largely a byproduct of oil weakness. I create an “adjusted” Saudi CDS by netting out Germany and as you would expect this fairly closely tracks oil prices:
But this is what is perhaps concerning – because even with oil prices undercutting the 2009 lows, Saudi adjusted CDS remains well below the levels briefly achieved in that period.
Combined with the additional risks of a war in Yemen, Saudi succession challenges (which we have highlighted previously) and the emergence of ISIS, it’s perhaps surprising that the world’s view of Saudi Arabia has not deteriorated even more. As discussed in the weekly, the Emerging Market pain trade seems to be a fairly direct outcome of the European desire to weaken its currency to capture global growth.
With Draghi continuing to push, and Yellen still not acting to turn the US into the extreme global consumer by strengthening the dollar, the rising risks in Saudi Arabia are a reminder that growth weakness has its own feedback mechanism – if oil prices stay at these levels for an extended period of time, it appears unlikely that Saudi Arabia will remain the reliable source that the world is currently counting on.
Source: Ice Farm Capital
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Now will people believe that when the banks took down oil prices that it was a direct attack on the Saud and not on Russia?
Now the truth will come out about how much the world loves the friendly Saud monarchy, the arrogant princes and the regular beheadings.
Can't we all fart in each other's faces and make up, like all good Saudis do?
http://nypost.com/2015/10/21/saudi-prince-accused-of-gay-sex-threats-and...
Did someone leak the Saudi Petroleum Reserves?
Their wells are 74% water, 26% crude as I recall. LOL.
well, lets open ECar stores in SA
I don't care. I just hope that Saudi-Arabia goes up in flames. I hate them so much. They are the main spreader of this wahhabistic cult gobshite. Also slavery and all the other bullshit this place produced in the past century.
And yeah - I know - if they go belly up, the game is over. But I am willing to take that hardship. They have their foot now on our sacred Europe...the sooner they topple, the better for us in the long run.
My views exactly. I'd take the ensuing shit just to see them go down.
Things will get 'interesting' for the Saudi's in the next few months since they keep sticking their dick in a blender. The only good thing about Obozo is his ability to do the worst thing at the worst time, so there is a giant flushing sound in the middle east that'll take the whole region down.......
they are a solid AA- imo
i don't like them personally but they aren't deadbeats.
I don't see how they can have CDS issues when they've barely any debt.
When you are openly funding terrorists across the middleeast,it gets expensive.
I thought markets liked totalitarian regimes?
In my opinion Crude Oil WTI currently shows no clear trend, which allows for intra-day trading on the smaller interval charts.
$43.30 - $49.80 are the trendless zones.
http://tripstrading.com/2015/11/02/oil-daily-neutral-area-between-43-30-...
So much for the story of how the Saudi 'Deep Pockets' will bankrupt US & Russian energy.
One big difference between SA and Russia is that Saudis have grown fat and entitled after 50 years of vast oil revenues. Russians know how to hunker down and live on scraps when they have to. If the head-choppers lose their air conditioning the place will blow.
The Saudis are burning the candle at both ends and in the middle. They are such evil shits. They deserve all the bad karma coming down on them. It is really the Saudi "royals" who are scum. Once again, the people are probably decent but the leaders are pure evil.
unlikely that Saudi Arabia will remain the reliable source that the world is currently counting on.
What's this bullshit Tylers. SA is not a reliable source of global beheading data anymore?
You're surely not talking about the supply of crude oil , come on, you guys dont think we readers are that stupid.