The US investment bank JPMorgan has warned that rising borrowing costs and the global fallout of Russia-Ukraine war could see up to 10 per cent of the riskier, 'junk' rated emerging market countries suffering from debt crises this year.
More acute balance of payment pressures and larger fiscal deficits are making problems for heavily indebted countries that import most of their energy and food.
Nearly half of the country sample has high repayment risk in our assessment. There are eight of which are at risk of reserve depletion by the end of 2023, signalling high default risks. The note said that these are Sri Lanka, Maldives, Bahamas, Belize Senegal, Rwanda, Grenada and Ethiopia, a jump in global interest rates in response to rising inflation and a possibility of a default in Russia and a restructuring in Ukraine, the EM sovereign HY default rate could reach 10 per cent this year, as well as Sri Lanka and Ethiopia on the back of the Common Framework process.