Pakistan among economies facing greatest funding risks: Moody’s

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LONDON: Sri Lanka, Armenia and Pakistan top the list of smaller emerging economies most vulnerable to refinancing risks, because they face a combination of large upcoming repayments and low foreign currency reserves, ratings agency Moody’s said yesterday.

Emerging-market governments embarked on an issuance spree in recent years, taking advantage of record-low interest rates and major central banks that were pumping trillions of dollars into the economy. But rising US Treasury yields and a stronger dollar, coupled with record lows for many developing currencies, have focused investors’ minds on just how much refinancing pressure some of those countries face.

Across frontier markets – a subset of riskier and often smaller emerging economies – some $4 billion of hard-currency sovereign bonds will mature each year from 2019 to 2021, with Asia most affected, Moody’s found. The refinancing burden will soar to $7 billion to $9 billion a year from 2022 to 2030 as large repayments come due in sub-Saharan Africa.   —Agencies

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