The sum of the costs is very striking. Using bond spreads of 1,000 basis points as a threshold, analysts calculate that there is $400 billion of debt at risk.
Argentina is by far the most exposed country with 150 billion dollars, while the following are Ecuador and Egyptwith between 40,000 million and 45,000 million dollars.
Veterans of crises hope that many will be able to avoid default, especially if global markets calm down and the IMF step in with your support. These are the countries that are at risk:
Ukraine
The Russian invasion means that Ukraine will almost certainly have to restructure its more than 20 billion dollars of debtwarn heavyweight investors like Morgan Stanley and Amundi.
The crisis looms in September, when 1.2 billion dollars must be paid in bonds. Aid money and reserves point to kyiv being able to pay. But this week, the state company Naftogaz asked for a debt freeze for two years, so investors suspect the government will do the same.
Tunisia
A deficit budget close to 10%, one of the highest public sector wage bills in the world, and concerns that ensuring, or at least delivering on, an IMF program may be difficult due to pressure from the president Kais Saied to strengthen their hold on power.
Tunisian bond spreads – the premium investors demand to buy the debt instead of US bonds – have risen to more than 2,800 basis points and, along with Ukraine and The SaviorTunisia is on Morgan Stanley’s list of the three countries most likely to default.
Egypt
Egypt has a debt/GDP ratio close to 95% and suffered one of the largest international cash exoduses this year: about 11,000 million dollars, according to JPMorgan
The signing of funds FIM Partners estimates that Egypt has to pay $100 billion of hard-currency debt over the next five years, including a hefty $3.3 billion bond in 2024.
Cairo devalued the pound 15% and asked the IMF for help in March, but bond spreads are now over 1,200 basis points and default swaps (CDS) -a tool used by investors to cover risk- are listed with a 55% chance of default.
However, half of the 100,000 million dollars that Egypt must pay between now and 2027 is to the IMF or the bilaterals, mainly in the Gulf.
Kenya
Kenya allocates approximately 30% of its income to interest payments. His bonds have lost nearly half their value and he currently does not have access to the capital marketsa problem before a $2 billion bond matures in 2024.
On Kenya, Egypt, Tunisia and Ghana, Moody’s David Rogovic said: “These countries are the most vulnerable just because of the amount of debt maturing relative to reserves, and the fiscal challenges in terms of stabilizing the debt burden. debt”.
The Savior
The adoption of bitcoinas legal tender has closed the door to the hopes of going to the IMF. Confidence has fallen to the point where an $800 million bond due in six months is trading at a 30% discount and longer-dated ones at a 70% discount.
Pakistan
Pakistan has reached a crucial agreement with the IMF. The advance could not be more timely, since the high prices of imports from Energy have brought the country to the brink of a balance of payments crisis.
Foreign exchange reserves have fallen to $9.8 billion, barely enough for five weeks of imports. The Pakistani rupee has weakened to record lows.
The new government has to cut spending fast as it spends 40% of its income on interest payments.
Ecuador
The country fell into arrears only two years ago, but has fallen back into crisis due to violent protests and the attempt to impeach the president. William Lasso.
It has a lot of debt and, with the government subsidizing the gas and food, JPMorgan has raised its forecast for fiscal deficit from the public sector to 2.4% of GDP this year and 2.1% next. Bond spreads have exceeded 1,500 basis points.
Source: Ambito
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