Elettra Artesino

So...

SSAs aren't backed by tax revenues like governments, but they are kind of implicitly backed by governments that participate in them.

They're not quite sovereign borrowers, though.

And so although their credit rating is very high, historically, they have traded a slight premium to government bonds and particularly to U.S.

treasuries.

And what we've seen recently is that this is starting to change.

That premium has shrunk very significantly over the past year.

I guess there's three reasons.

The first, I would say, is that investors are looking to diversify away from US policy risk.

We've seen the Trump administration take quite unorthodox actions since coming into office.

Liberation Day was an example.

The Greenland threats are another example.

Now there's a war in Iran.

The second reason I would say is investors' perception of U.S.

credit risk is rising.

The U.S.

is borrowing a lot on international markets.

It's issuing a lot of debt.

And that makes investors a bit more worried about the U.S.

's capacity to repay its obligations in the future.