Global bond sales will exceed $10 trillion in 2022, according to S&P Global Ratings

LONDON, April 5 (Reuters) – Global sovereign borrowing will hit $10.4 trillion in 2022, nearly a third above the average before the coronavirus pandemic, S&P Global Ratings said in a report.

Despite an economic recovery, borrowing will remain high due to high debt refinancing requirements and the war in Ukraine, the rating agency said in an annual note.

While 137 countries will borrow the equivalent of $10.4 trillion in 2022, about 30% less than in 2020, the overall figure is a third higher than the average borrowing between 2016 and 2019, said S&P.

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“Tighter monetary conditions will drive up government funding costs,” S&P analysts said.

“This will pose additional challenges for sovereign states that have been unable to revive growth, reduce their reliance on foreign currency funding and whose interest bills are already extremely high on average.”

Borrowing in emerging economies in Europe, the Middle East and Africa (EMEA) will increase by $253 billion to the equivalent of $3.4 trillion by the end of the year, it said. said S&P in an accompanying report Thursday.

Egypt, which recently sought IMF help, is expected to overtake Turkey as the region’s largest sovereign debt issuer, with $73 billion in bond sales, according to S&P analysts.

Among the world’s major countries, Kenya, Egypt and Japan have the largest share of debt due for rollover this year, analysts said, pointing to short-term debt at 26% and 30% of l total outstanding debt in Egypt and Kenya respectively. .

Commercial debt in EMEA’s emerging markets is expected to fall from 31% in 2016 to 37% of GDP, spurred by pandemic-related costs, increased commercial borrowing in Oman and Saudi Arabia and “continuing budget deficits”. high” in Egypt and Romania.

In emerging markets, JPMorgan analysts said in a note on Monday that the corporate default rate could reach 8.5% this year, more than double the 3.9% they expected before the invasion of the coronavirus. Ukraine by Russia and the highest since the global financial crisis. Read more

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Reporting by Saikat Chatterjee and Rachel Savage; Additional reporting by Marc Jones; Editing by Danilo Masoni and Clarence Fernandez

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