Entries for 'Debt Sustainability'

The external debt burden of many emerging markets surged in 2022 as EM currencies fell against the USD. Given the high risk of cyclical depreciation and ensuing currency mismatch, sovereign debtors raising foreign currency funds should consider appropriate hedging or other risk mitigation tools.

The growing links between financial leverage and non-financial risks (e.g. climate) are complex and will require new data tools and metrics to monitor and address.

As borrowing slowed, frontier market debt dipped to $3.5 trillion in Q2 2022—still $480 billion above pre-pandemic levels. Helped by economic recovery in an inflationary environment, the FM debt-to-GDP ratio edged down to 103% in Q2 2022.

Following four quarters of consecutive decline, the global debt-to-GDP ratio is edging back up, approaching 350% of GDP in Q2 2022. We expect the global debt ratio to reach 352% of GDP by end-2022.

Total global debt rose by $3.3 trillion in Q1 2022 to a new record of over $305 trillion-mostly due to China and the U.S.

Total debt in frontier markets surged to a new record high of $3.5 trillion in 2021-some $500 billion above pre-pandemic levels. However, after reaching an all-time high in 2020, FM debt declined to 108% of GDP in 2021-helped by recovery and inflation.

Some $10 trillion was added to the global debt mountain last year, bringing the total to a new record high of $303 trillion.

Economic recovery remains uneven and patchy for low and lower-middle income countries (LLMICs); Despite easing external debt strains, more than half of LLMICs are at high risk of—or already in—debt distress; Little information to date on how the G20 Common Framework is being implemented; Greater debt transparency could galvanize ESG investments in emerging and developing economies—a key COP26 theme.

Some $4.8 trillion was added to the global debt mountain in Q2 2021, bringing it to an all-time high of $296 trillion. Better news: the global debt/GDP ratio declined significantly in Q2 2021, though this follows a large spike in 2020.

Efforts to improve debt transparency are underway in both the private and public sectors; the IMF and World Bank, for example, provide technical assis...

Good investor relations practices call for better debt transparency that supports regular, meaningful debtor-creditor dialogue; Limited access to timely, accurate and clear data can hinder capital flows to developing countries, while improvements in debt transparency are associated with lower borrowing costs and higher sovereign credit ratings; In cases of default, fair debt restructuring requires active information-sharing between debtor and creditors.

High and rising sovereign debt levels have greatly increased the likelihood of further debt strains; Better sovereign debt crisis prevention and resolution is needed to reflect fundamental market changes in recent years; We believe that efforts to strengthen existing mechanisms should center on improving debt transparency, regular and meaningful private-public sector dialogue, and integrating ESG/SDG considerations—all will help borrowers’ market access.

Transparency around sovereign debt obligations remains limited, particularly for emerging and developing economies; International financial institutions could help by making more granular debt data available to the public; Greater clarity around the process, terms and conditions of sovereign debt restructuring would also support debt transparency.

Global debt across all sectors rose by over $10 trillion in 2019, topping $255 trillion. At over 322% of GDP, global debt is now 40 percentage points ($87 trillion) higher than at the onset of the 2008 financial crisis—a sobering realization as governments worldwide gear up to fight the COVID-19 pandemic. 

The global debt-to-GDP ratio hit a new all-time high of over 322% in Q3 2019, with total debt reaching close to $253 trillion. Global debt is set to grow faster in 2020 and is estimated to exceed $257 trillion by the end of Q1 2020, driven mainly by non-financial sector debt. 

Negative-yielding debt hits a fresh record high of over $13 trillion; 75% of that is safe-haven government bonds; Low borrowing costs could provide some breathing room for EMs with high government financing needs; Climate change risks aren’t just domestic: over $29 trillion of G20 (mostly G7) cross-border investments are at risk. With awareness of these risks on the rise, our Green Flows Tracker shows net inflows of $2bn in Q2 (and record inflows for June); Insurer perspectives on LIBOR transition: the regulatory framework for EU insurers still requires a LIBOR-based term structure as the discount rate for insurance obligations.  

Disconnect between Fed dots and market rate expectations set to persist; Negative-yielding debt hits a record high of over $12 trillion—putting the risk of asset price bubbles in focus; Further USD strength could pose significant challenges for non-bank borrowers in emerging markets and mature markets outside the U.S.; More monetary stimulus would widen the gap between the cost of equity and debt, triggering another sharp accumulation in corporate debt; Robust growth in Panda bond issuance