Economic news

Global creditors quiz ratings agencies over debt relief to the poorest

2024.02.08 14:26


© Reuters. FILE PHOTO: The emblem of credit standing company Moody’s Investor Services is seen outdoors the workplace in Paris October 24, 2011. REUTERS/Philippe Wojazer/File Photo

By Jorgelina do Rosario

LONDON (Reuters) – Global creditors and Moody’s (NYSE:), Fitch and S&P Global Ratings met on Wednesday to focus on ratings agencies’ actions after debt relief supplied by official creditors to a few of the world’s poorest nations, a supply mentioned on Thursday.

The assembly additionally mentioned methodology on credit score motion in the occasion international locations perform a debt swap and in different debt conditions, the supply acquainted with the state of affairs added.

The function of the agencies got here into focus in 2020 when the financial fallout from COVID-19 pushed dozens of poor nations into debt misery.

The Debt Service Suspension Initiative (DSSI) launched in April 2020 by the G20 group of countries allowed the momentary suspension of government-to-government debt funds for the poorest nations.

However, international locations that utilized for relief had been punished with downgrade warnings and destructive statements from ratings agencies, which added to the poorest international locations’ borrowing prices and riled governments.

Although in principle solely tasked with score the business a part of borrowing, the agencies cited the G20’s name for personal sector creditors to take part in the initiative.

The digital assembly – which was held in three consecutive periods with every ratings company – was a part of the Global Sovereign Debt Roundtable that brings collectively representatives from the International Monetary Fund (IMF), the World Bank and G20 to sort out points surrounding sovereign debt.

The roundtable was launched to sort out points after international locations which have tipped into default since 2020 struggled to make progress of their debt restructuring efforts.

Spokespeople for Moody’s and S&P Global Ratings declined to remark. A spokesperson for Fitch didn’t instantly reply to a request for remark.

The supply, talking on situation of anonymity, mentioned the subsequent technical assembly of the roundtable in March would revisit “Comparability of Treatment” (COT) points in the hope of creating progress on the difficulty forward of the IMF World Bank Spring conferences in April.

A precept from the Paris Club of rich creditor nations, COT goals to guarantee its members don’t give outsized concessions in contrast to personal lenders or others outdoors the group. But a disagreement over how to asses this derailed Zambia’s debt restructuring cope with its bondholders in November.

Wednesday’s gathering was attended by representatives from the Institute for International Finance, the International Capital Markets Association, monetary corporations BlackRock (NYSE:) and Standard Chartered (OTC:) in addition to Zambia, Ethiopia, Ghana, Suriname, Sri Lanka, and Ecuador.

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