Slovakia enjoys more investor trust than its neighbours

According to an article published in Hospodarske Noviny today, the Slovak Republic enjoys greater investor trust than its Visegrad 4 neighbours Poland, Hungary and the Czech Republic.

Investors believe that there is less chance of Slovakia running aground on the shores of bankruptcy, than there is in the case of its Visegrad 4 partners.

Investors often base their decisions and risk of credit exposure on the level of Credit Default Swaps, which basically allow them to get out of a potential default situation quickly, because in effect they do not own the bonds being purchased. The higher the CDS cost, the more chance there is of default.

Slovakia’s situation has been getting worse, though, thanks mostly to the public finance black hole. Even so, this is counterbalanced by the fact that Slovakia has the euro as its currency and also a fairly robust banking system.

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