Default risk is rising in America, as many states can’t balance their budget.
Although a state default would be unprecendeted, CDS spreads show that traders take the risk seriously. We’ve got the latest numbers from Bloomberg (via Credit Writedowns).
Are you living in the next Greece?
Wisconsin CDS spread — 72.3 bps
Wisconsin was forced to make painful budget cuts last year, including 16 days of furloughs and $5 billion in new taxes.Municipal Bond Ratings (Moody’s): Aa3
Massachusetts CDS spread — 77.1 bps
Massachusetts experiences a net migrations of nearly negative 10,000 people per year, which will reduce the amount of taxpayers in the state if the trend continues.Municipal Bond Ratings (Moody’s): Aa1
Ohio CDS spread — 87.8 bps
High unemployment may have caused an unprecedented surge in Ohio liquor sales.Municipal Bond Ratings (Moody’s): Aa1
Nevada CDS spread — 131.1 bps
Nevada went nuts with next year’s budget, cutting spending on education, adult care, hearing aids, speech therapy, adult diapers, and much more.Municipal Bond Ratings (Moody’s): Aa2
New Jersey CDS spread — 142.5 bps
New Jersey teachers want Governor Chris Christie dead for pushing a salary freeze.Municipal Bond Ratings (Moody’s): Aa2
New York CDS spread — 147.3 bps
New York state is facing a deficit of $60.8 billion over the next five years, according to Reuters.Municipal Bond Ratings (Moody’s): Aa2
BONUS: New York City CDS spread — 147.3 bps
Michigan CDS spread: 166.7
Michigan is one of seven states where local communities might lose the support of their state government as a result of financial problems.Municipal Bond Ratings (Moody’s): Aa3
California CDS spread: 170.9 bps
Schwarzenegger’s office just warned of “terrible cuts, absolutely terrible cuts” coming soon to California.Municipal Bond Ratings (Moody’s): Baa1
Illinois CDS spread: 217.8 bps
Illinois budget crisis is reaching a boiling point as Governor Quinn still can’t close the $13 billion gap.Municipal Bond Ratings (Moody’s): Aa3
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