Mapping decline in CDS and implied probabilities of default for Euro area 'peripherals' over the last 12 months:
Largest declines: Greece, followed by Portugal, Spain, Italy and lastly Ireland. Timing of declines and divergent macrofundamentals of these countries suggest that drop in CDS has little to do with internal policies and performance of individual states - the 'periphery' is still being priced jointly. The decline in risk assessments of the 'peripherals' is primarily down to common policy, aka: the ECB.
On the other hand, if we are to distinguish within the 'peripherals', we can identify 3 sub-groups of countries:
- Weakest and stand-alone: Greece
- Mid-range weakness, also stand-alone: Portugal
- Stronger 'peripherals': Ireland, Spain and Italy