A credit analysis on several European/PIGS Banks and their respective sovereign. Continued from Part 1.
Some highlights:
- Sovereign CDS spreads are generally tighter than the banks’ with some notable exceptions including Santander & BBVA (almost 50 bps and 20 bps, respectively vs. Spain) and Caixa Geral (a couple bps vs. Portugal). Bloomberg also recently highlighted a similar phenomenon evidenced by the increasing gap in perceived credit risk between several of these countries’ large industrial companies and their respective sovereign (such as EDP-Energias de Portugal and Portugal Telecom)
- Outside of the Irish banks, Portugal’s Banco Espirito Santo is currently the riskiest of the other major major PIGS banks
Credit analysis provided by Marc Bosset