“In the old order, sovereigns were tighter than corporates,” Greg Venizelos, a credit strategist in London at BNP Paribas SA, told Bloomberg. “There’s been a repricing and corporates are now better credit quality than sovereigns in the periphery.”
According to the news service, 33 companies in an index of credit-default swap prices are less risky than governments, including six each in Spain and Italy. The index of 125 European companies dropped last week to a record 76 basis points lower than an index of sovereigns from Greece to Germany.
Credit-default swaps, which investors use to insure against losses or speculate on creditworthiness, show how non-financial companies have shrugged off the worst effects of the budget-deficit crisis that has roiled nations. Bloomberg says companies with diversified or stable revenue and strong balance sheets have become the new havens amid concern that Europe’s so-called peripheral countries will need bailouts.