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Date: Mon, 10 Apr 2000 07:23:40 EDT
Subject: S&P Warns Of Debt Defaults
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This is from the Financial Times interactive.

Hamjatta

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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.






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