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Nigeria, others left behind in EM debt rush, Moody’s says

Nigeria and other world’s poorest countries are struggling to get access to international debt markets, rating agency Moody’s said recently, even as bond issuance by bigger emerging markets and the rest of the world surges to record highs. According to the Vice President, Yemi Osinbajo, Nigeria will avoid issuing Eurobonds due to their expense, and will look at alternative ways to raise funds to support the economy in the face of a looming recession.

 

“We are not likely going to explore again the Eurobond market because we are trying to avoid commercial borrowing,” Osinbajo told journalists in a group interview late on Friday. Osinbajo said Nigeria is looking at World Bank loans rather than Eurobonds, though the lender delayed a $1.5 billion facility in August, expressing concern that Nigeria had not adopted a unified, flexible exchange rate to close the gap between official and black market naira rates.

 

With $488 billion of emerging- market Eurobonds — debt denominated in dollars and other major currencies — already sold by countries needing to fill COVID budget holes this year, last year’s record $590 billion is on course to be broken Reuters report.

 

Middle East governments have accounted for over a third of all emerging-market sovereign issuance this year as they try to make up for lost oil revenues. None were sold by sub-Saharan African countries between July and September. “Investment-grade debt issuers are taking full advantage of attractive funding conditions in global emerging markets,” said Rahul Ghosh, a senior vice president at Moody’s. “However, the picture is very different for issuers lower down the credit-quality spectrum, where market access remains challenging,” Ghosh said, referring to the disparity as a “two-speed recovery”.

 

Last quarter did see a drop in the pace of overall emergingmarket sovereign issuance, but it won’t change the overall picture of a surge in debt, helped by global stimulus, which has pushed down interest rates and allowed longer-term debt.

 

The United Arab Emirates, Qatar and Saudi Arabia have issued the most debt so far this year. Indonesia, Romania and Mexico have also raised more than $10 billion, and sources told Reuters that China was readying a $6 billion bond. Emerging-market corporate issuance has also picked up, especially in property and real estate, Moody’s said, but riskier, high-yielding corporate bond issuance in emerging markets remains below 2019’s trajectory

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