Warning on health of private sector

By Guy Dinmore in Florence, published on June 7, 2010

New research demonstrating a close correlation between the probability of default among listed European companies with the risk of sovereign default should serve as a warning to governments implementing austerity packages to avoid harming the private sector, according to Edward Altman, New York University professor of finance.

Presenting his draft findings to the International Risk Management Conference in Florence, co-organised by the European Commission’s Joint Research Centre, Prof Altman said the health of the private sector was an important factor in sovereign default risk.Research into nearly 1,600 listed companies in eight European countries found a close correlation between the median probability of default over five years with five-year credit default swap spreads.

Italy approves its share of Greek rescue

by Guy Dinmore in Rome

Published: May 7 2010

Italy’s centre-right government approved its contribution to the European Union’s rescue package for Greece on Friday by authorising loans of €14.8bn ($18.7bn) over three years with a first tranche of €5.6bn, Ansa news agency reported.

The approval was issued in the form of a decree which takes effect after approval by the head of state. A government spokesman said details would be made public shortly.