Expand chart
Data: Sovereign Default Database; Chart: Naema Ahmed/Axios

For all the geopolitical chaos in the world, one thing has never been safer: Lending money to governments.

Why it matters: It’s been well over a decade since defaulted sovereign debt accounted for even 1% of total world debt. Mega-defaults by Argentina and Greece generated plenty of headlines, but ultimately were relatively small by historical standards. As sovereign debt burdens rise around the world, however, these golden days won’t last forever. Government debt that feels perfectly safe today could turn out to be plenty risky tomorrow.

  • The most recent data, which includes all sovereign defaults up to the end of 2017, shows that defaulted sovereign debt accounts for just 0.3% of all world public debt. That’s an all-time low, and is down sharply from the high point of 6.2% reached in both 1987 and 1990.
  • Puerto Rico is included in the 0.3% figure, as are the other big outstanding sovereign debtors — Sudan, Iraq, and Venezuela.
  • The total number of sovereigns in default is also hitting new lows. It now stands at 79, the lowest number since 1981.

Be smart: Sovereign debt won’t look this healthy forever. "Looking ahead, we expect sovereign defaults to pick up again over the next decade," write the banks' David Beers and Jamshid Mavalwalla.

  • The biggest risk on the horizon: Italy, which alone has $2.8 trillion in sovereign debt outstanding, or about 4.3% of total world public debt. That’s 11.5 times the $216 billion in default today.
  • The bad years in the late 1980s were dominated by defaulted bank loans. Today, countries borrow very little directly from banks. But Italy's banks have more than 10% of their assets — some $425 billion — invested in Italian government bonds.
  • The "doom loop," where the sovereign and its banks bring each other down, remains a very real worry.

Go deeper: The podcast I recently recorded with the doyen of sovereign debt restructuring, Lee Buchheit, was easily my favorite episode of 2018.

Go deeper

53 mins ago - World

Jeremy Corbyn suspended by U.K. Labour Party over anti-Semitism report

Photo: Christopher Furlong/Getty Images

The U.K. Labour Party has suspended its former leader, Jeremy Corbyn, after a watchdog report found that the party failed to properly take action against allegations of anti-Semitism during his time in charge.

Why it matters: It represents a strong break by Keir Starmer, Labour's current leader, from the Corbyn era and one of the party's most persistent scandals.

U.S. economy sees record growth in third quarter

The U.S. economy grew at a 33.1% annualized pace in the third quarter, the Commerce Department said on Thursday.

The state of play: The record growth follows easing of the coronavirus-driven lockdowns that pushed the economy to the worst-ever contraction — but GDP still remains well below its pre-pandemic level.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Large coronavirus outbreaks leading to high death rates — Coronavirus cases are at an all-time high ahead of Election Day — Fauci says U.S. may not return to normal until 2022
  2. Politics: Space Force's No. 2 general tests positive for coronavirus
  3. World: Taiwan reaches a record 200 days with no local coronavirus cases
  4. Europe faces "stronger and deadlier" wave France imposes lockdown Germany to close bars and restaurants for a month.
  5. Sports: Boston Marathon delayed MLB to investigate Dodgers player who joined celebration after positive COVID test.