These 10 countries are in danger of falling into default

Egypt

Egypt has a debt-to-GDP ratio of close to 95% and suffered one of the largest international cash exoduses this year: some $11 billion, according to JPMorgan.

Fund firm FIM Partners estimates that Egypt has to pay off $100bn of hard-currency debt over the next five years, including a hefty $3.3bn 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 credit default swaps (CDS) – an investor’s tool to hedge risk – are trading with a 55% chance of default.

Francesc Balcells, CIO of emerging country debt at FIM Partners, estimates, however, that about half of the $100bn Egypt must pay by 2027 is to the IMF or bilaterals, mainly in the Gulf. “Under normal conditions, Egypt should be able to pay,” Balcells said.

Kenya

Kenya allocates approximately 30% of its income to interest payments. Its bonds have lost nearly half their value and it currently has no access to capital markets, a problem before a $2bn 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 bitcoin as legal tender has closed the door on hopes of going to the IMF. Confidence has fallen to the point where an $800m bond due in six months SV015690909= 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 energy imports have brought the country to the brink of a balance of payments crisis.

Foreign exchange reserves have fallen to $9.8bn, 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 Latin American country fell into default just two years ago, but has slipped back into crisis due to violent protests and the attempt to oust President Guillermo Lasso.

It has a lot of debt and, with the government subsidizing fuel and food, JPMorgan has raised its public sector fiscal deficit forecast to 2.4% of GDP this year and 2.1% next. Bond spreads have topped 1,500 basis points.