Econostrum | Economic News in the Mediterranean



Turkey will be the largest sovereign issuer of commercial debt in 2021 in the EMEA region

According to S&P, commercial borrowing from developed economies in the EMEA zone alone could reach €1163 billion (photo: F. Dubessy).
According to S&P, commercial borrowing from developed economies in the EMEA zone alone could reach €1163 billion (photo: F. Dubessy).
EMEA. S&P Global Ratings estimates that governments worldwide will need to borrow $12.6 trillion ($12,600 bn-€10,475 bn) in 2021. This is 20% less than in 2020 (a pivotal year with the arrival of Covid-19), but 50% more than the multi-year average before the health crisis.

The rating agency publishes, Monday, March 1, 2021, three studies on the subject, including one devoted to mature and emerging economies in the Emea zone (Europe, Middle East, Africa). To support their struggling economies, it appears in these documents that the States will have to face an additional financial cost of 10.9 trillion dollars (€9,000 billion) for the years 2020 and 2021. This sum represents more than 13% of global GDP in 2020. It will bring "the total stock of commercial debt to a record $67.5 trillion (75% of world GDP) by the end of the current year". Or €56,120 billion.

S&P notes that while "unprecedented monetary stimulus has allowed advanced and several emerging economies to borrow more, while keeping interest charges relatively stable," governments will have to overcome "political and economic risks to begin stabilizing public finances as the world deploys vaccines and begins to recover from the pandemic. With the danger of "downward pressure on sovereign ratings".


1.4 trillion dollars of borrowing for the Emea zone alone

Commercial borrowing by developed economies in the EMEA zone alone could reach $1.4 trillion (€1163 billion) in 2021. The agency predicts high but slightly lower borrowing for Europe compared to 2020 as "the cost of debt for developed European governments is close to its lowest level in history and is likely to remain so, particularly in the Eurozone, due to the ECB (European Central Bank) asset purchase programs".

In the euro zone, sovereign borrowing is expected to decline only slightly (by less than €40m) to €1.26 trillion (€1050bn). This implies that gross debt sales will be 44% higher this year than in 2019, before Covid-19 arrives.

Emerging economies will also see a decrease of just over $100bn (€83bn) for commercial debt issues amounting to $571bn (€474bn). "The commercial debt of these economies will reach the equivalent of $3.2 trillion ($3,200 bn-€2,659 bn) by the end of 2021, an increase of $288 bn (€239 bn) year-on-year".

S&P's EMEA study indicates that in 2021, Turkey is expected to be the largest sovereign issuer in this large region ($78 bn vs. $68 bn in 2020) ahead of Egypt ($63 bn) and Russia ($52 bn). Together, these three countries will account for more than 33% of the total borrowed by the fifty-three states covered by this report. Among them, Egypt has the highest debt-to-GDP ratio (88%) and the highest stock (33% of the total). Seventy-eight percent of the country's outstanding sovereign debt is in domestic currency, and only about three-quarters of it is negotiable.


Eric Apim

Tuesday, March 2nd 2021

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