CME: Sovereign debt risk up 30 percent

The cost of insuring sovereign debt against default climbed 30 percent on average last quarter amid Europe's escalating fiscal crisis, according to CMA DataVision.

Credit-default swaps on 93 percent of the 70 governments tracked by CMA rose, with Greece temporarily overtaking Venezuela as the country with the world's highest bond risk, the CME Group Inc. unit said in a report published today.

"The major widening action in European sovereign credits indicates that the Eurozone remains the hub and focus of the global debt crisis," according to CMA's Global Sovereign Credit Risk report. "None of the Western European sovereign credit- default swaps tightened."

European Central Bank President Jean-Claude Trichet this week urged governments to trim deficits to improve consumer and investor confidence. The European Union in May hammered out a 750 billion euro ($939 billion) rescue package to help ease a regional debt crisis sparked by Greece's budget deficit.

Protection costs for the quarter's worst European performers more than doubled, with swaps on Greece soaring 190 percent, Belgium climbing 168 percent, Spain 129 percent and Portugal 127 percent, the report said.

U.K. credit-default swaps were little changed as the country's new coalition government announced a reduction in the "scale of state spending and tax increases to help bring public debt under control," the report said.

Norway, Finland, the U.S., Denmark and Sweden have the lowest probability of sovereign default, according to the swaps market. Venezuela, Greece, Argentina, Pakistan and Ukraine are the riskiest states.