The July stress tests, which did not allow for sovereign defaults, offer scant guidance.

ECONOMIST: The world economy

There is the added situation that many such insured defaults are staged to allow the issuer to accelerate the bonds and refund them at a lower interest rate.

FORBES: Even If A Bond Doesn't Default, You Can Still Lose Your Money

Because they allow investors to lay off the risk of borrowers' defaults, they free lenders to lend more.

ECONOMIST: Financial markets