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Monday, February 6, 2023

First week of the year with record levels of indebtedness in emerging countries

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Indonesia, Hungary, Slovenia, Romania and Hong Kong were some of the countries that faster they came to markethelping sovereigns to sell debt worth 21.3 billion dollarscompared to 13.4 billion in the first week of 2022, according to Morgan Stanley analysts.

Another 6.5 billion dollars came from Business from emerging markets, bringing the combined number of $28 billion far exceeds the total of $19 billion of dollars of the first week of last year and the previous record of $24 billion from 2021.

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The increase in interest rates worldwide meant that sovereign debt issuance was cut in half, to a more than a decade low of $87 billion last year. The figure contrasts with the 176,000 million dollars of 2021 and the approximately 230,000 million of 2020when governments borrowed record amounts during the COVID-19 pandemic.

Combined with markedly lower corporate debt issuance, andhe grand total last year was just over $300 billion. that was also less than half of the $713 billion from 2021according to Morgan Stanley calculations, and also the lowest amount since 2021

What about Argentina’s debt

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The sharp rise in interest rates that led to the United States Federal Reserve (FED) and other central banks of the world in 2022 caused an increase in the cost of international financing and pushed many countries to the brink of debt crises. Today, more than $600 billion in bonds and loans are at risk, above all, in the emerging and financially vulnerable countries, among which is Argentina.

Specialists warned that the debt situation of emerging countries worries investors, although they point out that it is not a new situation, since since the Covid-19 pandemic broke out, all the emerging countries increased their debt to finance the exceptional expenses of the health scenario.

A recent World Bank (WB) report warned that the world’s poorest countries currently spend more than a tenth of their export earnings on foreign debt service, the highest proportion since 2000. “The debt crisis facing developing countries has intensified,” the WB Group President said in a statement.David Malpass.

Source: Ambito

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