JPMorgan warns 10% of junk-rated emerging markets face debt crises

div classBodysc17zpet90 cdBBJodivpLONDON Reuters – Rising borrowing costs and the global fallout of the RussiaUkraine war could see up to 10 of riskier, ‘junk’rated emerging market countries suffer debt crises this year, analysts at U.S. investment bank JPMorgan have warned.p

pMore acute balance of payment pressures and larger fiscal deficits are now compounding problems for heavilyindebted countries that import most of their energy and food. pdivdivdiv classBodysc17zpet90 cdBBJodiv

p“Nearly half of the country sample is classified as carrying high repayment risk in our assessment. Of these, eight are at risk of reserve depletion by the end of 2023, signaling high default risks. These are Sri Lanka, Maldives, Bahamas, Belize Senegal, Rwanda, Grenada, and Ethiopia,” said the note led by strategist Trang Nguyen on Tuesday. p

pA jump in global interest rates in response to fastrising inflation also means many are facing the reality of rising borrowing costs, a departure from over a decade of socalled “easy money”. p

p“Accounting for risks of a potential default in Russia and restructuring in Ukraine…the EM sovereign HY default rate could reach 10 this year when also considering Sri Lanka and Ethiopia on the back of the Common Framework process,” the note added. p

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pp Reporting by Marc Jones, editing by Jorgelina do Rosariop

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