Many of the 5 year sovereign credit default swaps that we track saw significant declines at the beginning of the year, however now those same CDS have started to make moves higher over the past two months. One of the more pronounced moves has been seen in the Russian 5 year which is up 15% so far in May. Here's the top 10 gainers in sovereign credit default swaps in May:
Even with this recent move most 5 year sovereign CDS are still well below their 2012 highs and this includes the Russian swap. The Spanish 5 Year is one of the few which has managed to eclipse its previous 2012 high. In the following line chart we show both the Spanish and Russian 5 year swaps going back to October of 2011.
According to this article from Buisnessweek, Russian bonds have weakened recently as a result of declining oil prices. If we compare the Russian 5 year CDS against front month Brent futures, we see a fairly tight inverse relationship.
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