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Debt Relief May Go Beyond the Poorest Nations

Debt Relief May Go Beyond the Poorest Nations

(Bloomberg) --

Private creditors representing more than $9 trillion of assets under management formed a group to negotiate debt relief for African nations.

The group, which includes more than 25 firms including Farallon Capital Europe LLP, Aberdeen Asset Management PLC and Greylock Capital Management LLC, said it will seek to discuss debt concessions on a case-by-base basis.

That may derail plans to include private creditors and Eurobonds in a blanket relief that has suspended payments on official loans to wealthier countries.

Some debt-law scholars have argued that there wasn’t enough time for a case-by-case approach with several African nations already shut from international debt markets. Private creditors, in turn, say broad-based measures would risk unnecessary costs and thwart future access to capital.

Debt Relief May Go Beyond the Poorest Nations

Key Developments:

  • The African Development Bank approved a $13.7 million grant to Zimbabwe, giving the debt-stricken nation a lifeline to deal with the coronavirus pandemic.
  • Uganda would prefer debt cancellation to help rebuild its economy after the fallout from the coronavirus pandemic, rather than rescheduling of payments.
  • It will take more than a forbearance initiative to address a looming emerging-market debt crisis, according to University of California Berkeley economist Barry Eichengreen.

Earlier:

  • The world’s wealthiest economies may need to pardon the debts of some low-income nations and help rework the obligations of larger developing countries if the coronavirus pandemic ravages their finances, according to the chair of the Paris Club.
  • African finance ministers have started talks with private creditors to find a way to temporarily suspend debt payments without triggering defaults.
  • More governments will probably default on debt payments in 2020 as the coronavirus pandemic and collapse in oil prices exacerbate credit weaknesses, Fitch Ratings said.

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