Analysts at Goldman Sachs said that sovereign debt default risks are on track to rise further in 2021 and that Iraq, Sri Lanka, Angola and Gabon are all likely to default.
2020 has seen five defaults or already bad debt swaps – with investors swapping out new debt, often for longer maturities, at reduced value – this year in the wake of the COVID-19 crisis, the largest number in nearly two decades.
The report stated that although most of the high-yielding sovereign debt of emerging markets examined remains below the levels associated with the possibility of a previous default, Ecuador, Argentina and Lebanon that have defaulted recently are among the markets with a high probability of defaulting on debt. Delinquency is defined as ranging from default to bad debt swap.
There is also a relatively high likelihood of prolonged debt default in Iraq, Sri Lanka, Angola and Gabon, and a relatively high probability of default.
There is a high probability of defaulting debts in Belarus, Mozambique, Mongolia, El Salvador and Pakistan, according to the report, with a relatively low probability of default.
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