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23 February 2020
MARKETS

Emerging Market EMEA sovereign borrowing will likely reach $473.3 billion in 2020

Slightly less than half of the EM EMEA sovereigns' gross borrowing will be to refinance maturing long-term debt, resulting in an estimated net borrowing requirement of $242 billion, 5.5 per cent lower than in 2019.

Eugene Kaspersky/Flickr

by William Mullally

S&P Global Ratings says it forecasts the gross borrowing of 53 emerging market sovereigns' in Europe, the Middle East, and Africa (EMEA) from commercial sources will amount to $473 billion in 2020, according to a recent report titled Sovereign Debt 2020: Emerging Market EMEA Borrowing Will Likely Inch Up 0.6 per cent To $473.3 Billion, published on RatingsDirect.

This amount corresponds to 5.5 per cent of these sovereigns' combined 2020 GDP, with Turkey likely to be the biggest borrower, representing about 12 per cent, followed by Saudi Arabia and Egypt.

"We forecast that sovereigns' commercial debt in emerging market EMEA will increase by $2.7 trillion this year, ending the year about $190 billion higher than in 2019. We analyzed the sovereign borrowing and debt trends for the 53 emerging market (EM) EMEA sovereigns, which together accounted for 5% of the estimated global outstanding debt in foreign and local currency at year-end 2019. This forms part of our analysis of global sovereign debt trends," said S&P. 

Based on this analysis, S&P expects the 53 EM EMEA sovereigns will borrow the equivalent of $473.29 billion from long-term commercial sources in 2020, representing an increase of 0.6 per cent compared with 2019. Slightly less than half of the EM EMEA sovereigns' gross borrowing will be to refinance maturing long-term debt, resulting in an estimated net borrowing requirement of $242 billion, 5.5 per cent lower than in 2019.

Part of the change in net borrowings reflects exchange rate movements, since S&P have converted all numbers presented here into U.S. dollars. S&P projects that EM EMEA sovereigns' commercial debt will reach an equivalent of $2.7 trillion by the end of 2020, a year-on-year increase of $189 billion (or 7.5 per cent). Their commercial debt is therefore poised to account for 31.8 per cent of combined GDP, up from 30.7 per cent in 2016.

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