Default Fears Mount for ‘BATS’ as Emerging-Market Pain Deepens

(Bloomberg) -- Investor anxiety about a missed debt payment by one of the world’s largest developing nations is jacking up the cost of credit-default swaps from the "BATS" -- Brazil, Argentina, Turkey and South Africa -- to multi-year highs.

• Argentina’s implied default probability over the next five years climbed this month to 41 percent, the highest since Mauricio Macri’s government ended the nation’s decade-long legal battle with most holdout creditors.
• Turkey’s implied default odds during that span rose to 31 percent, the highest since the 2008 global financial crisis.
• Brazil’s implied default odds increased to 18 percent, the highest since the country’s worst-ever recession deepened in late 2016.
• South Africa’s implied default odds soared to 15 percent, the highest since Donald Trump’s election in November 2016.

Analysts are taking note. Turkey and Argentina have "substantial" medium-term default risks as they’ll probably face recessions and rising political risks ahead of key votes, Kasper Bartholdy, a strategist at Credit Suisse in London, wrote in a note today.

Still, the nations have a long way to go before they’re put in the same category as Venezuela, which has racked up more than $6 billion in missed bond payments in the past year alone amid a worsening financial and humanitarian crisis.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, Alec D.B. McCabe, Peter Millard

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