Return-path: [log in to unmask] From: [log in to unmask] Full-name: HKanteh Message-ID: <[log in to unmask]> Date: Mon, 10 Apr 2000 07:23:40 EDT Subject: S&P Warns Of Debt Defaults To: [log in to unmask] MIME-Version: 1.0 Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit X-Mailer: AOL 5.0 for Windows sub 32 This is from the Financial Times interactive. Hamjatta *************************************************** S&P warns of debt defaults By Aline van Duyn in London - 9 Apr 2000 21:00GMT The fragile fiscal and foreign exchange positions of Ivory Coast, Romania and Zimbabwe may lead to debt defaults by those countries this year, according to Standard & Poor's, the rating agency. Private sector creditors may also be affected in Indonesia and Nigeria by having to share the cost of any debt restructuring with official lenders, S&P says in a study issued on Monday. The threat of default by these countries coincides with a slight fall in the number of governments defaulting on their debt repayments. S&P's study shows that in the first quarter of this year 27 issuers - including Russia - were in default on various types of bond and bank debt, compared with 29 in 1999 and 33 in 1998. "The dollar value of defaulted obligations now looks set to fall below last year's, given the pace at which debt workouts are being completed," said David Beers, managing director of sovereign ratings at S&P. The value of defaults stands at around $66bn. This is small compared to the trillions of dollars of debt outstanding in the capital markets. Mr Beers said the impact on the global financial system of any defaults by Romania, Ivory Coast and Zimbabwe would be limited because of the relatively small amounts of debt involved. Ivory Coast may be the first to go into default. It has around $7bn outstanding in Brady bonds, restructured debt which is backed by US government debt. Bankers said last week that the Ivory Coast, scene of a coup in December, still has to make a $3m payment due this month to avoid falling into arrears on interest payments, meaning it could technically be in default as soon as next month. Zimbabwe, where political violence has flared ahead of elections expected in May, does not have any bonds outstanding so a default would affect only bank debt. Romania, which has been struggling with a balance of payments crisis and has not issued bonds since 1997, is rated C - sub-investment grade - by S&P. The International Monetary Fund has put pressure on countries restructuring debt to include both private and public-sector lenders, in "burden-sharing", and this could affect lenders to Indonesia and Nigeria this year. Indonesia, which meets its official Paris Club lenders this week, has around $700m outstanding in bonds and $2bn in bank loans. Mr Beers said a burden-sharing restructuring might affect only bank loans. Nigeria is a slightly different case because it may ask for its outstanding Brady debt, originally rescheduled in 1992, to be revised again to include further debt forgiveness. The sharp rise in the oil price, which has benefited Nigeria as an oil-exporting economy, may weaken its case for further writeoffs. ------------------------------------------------------------------------------ --