{"id":548010,"date":"2022-07-21T04:00:24","date_gmt":"2022-07-21T04:00:24","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/07\/21\/the-incoming-em-debt-crisis-is-getting-worse\/"},"modified":"2022-07-21T04:00:24","modified_gmt":"2022-07-21T04:00:24","slug":"the-incoming-em-debt-crisis-is-getting-worse","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/07\/21\/the-incoming-em-debt-crisis-is-getting-worse\/","title":{"rendered":"The incoming EM debt crisis is getting worse"},"content":{"rendered":"

<\/a> The number of emerging-market countries at risk of default is at a record high<\/strong> after Angola and Gabon became the latest to see yields on their sovereign bonds rise to distressed levels, Bloomberg<\/a> reports. There are now 21 nations with yields 10% higher than US treasuries, a warning sign that indicates a rising risk of default.<\/p>\n

Egypt is one of them:<\/strong> Egypt, along with Nigeria and Kenya, saw sovereign bonds falling into distressed territory recently, according to the business newswire. With a number of large foreign debt repayments on the horizon, Moody\u2019s warned in May<\/a> that it could downgrade Egypt\u2019s credit rating if its foreign reserves fall further. Egypt is due to repay almost USD 4 bn in November and another USD 3 bn in February, according to Bloomberg<\/a> data.<\/p>\n

Almost a fifth of all EM sovereign debt was trading at distressed levels earlier this month:<\/strong> Bonds worth USD 237 bn were in distressed territory earlier this month \u2014 and that was before Angola and Gabon joined the club of nations staring down the barrel of a debt crisis.<\/p>\n

Higher interest rates are only making debt relief more important:<\/strong> Low-income countries will suffer rising poverty and instability if rich nations don\u2019t get serious about providing debt relief, World Bank President David Malpass said<\/a> following the G20 meeting this week, which made little progress on debt reduction.<\/p>\n

Countries that do default on their debt \u201cmust brace themselves for tricky <\/strong>negotiations ahead,\u201d <\/strong>writes the Financial Times\u2019 Alan Beattie<\/a>, arguing that a lack of clear international rules on how to restructure sovereign debt and the rise of China as a sovereign creditor will make it difficult to restructure debt fairly. Most defaulters aren\u2019t big-spending EMs who have bitten off more debt than they can chew, he adds. \u201cIt\u2019s important to keep this in context and not start turning it into a morality play about feckless developing country governments,\u201d Beattie writes.<\/p>\n

Also worth noting this morning: <\/strong><\/p>\n