Debt markets in some of the world’s most vulnerable nations are flashing warning signals as Russia’s invasion of Ukraine heaps extra stress on fragile economies. Graphic: BLOOMBERG
Many investors have not been waiting around to find out. Funds have dumped bonds from developing countries this year, with outflows reaching $14.3bn as of March 16, according to Bank of America, citing EPFR Global data. The first big question for investors is whether Russia, cut off from international payments and facing a deep recession, can avoid default. Some holders of Russia’s two Eurobonds with coupons due in March 2022 said they received payment in dollars, a relief to investors who feared the nation would resort to settling the debt in roubles. Still, Russian credit swaps on March 18 implied a 48% chance of default within a year.
“Countries that depend a lot on Russian remittances will suffer given the weakness of the rouble and potential loss of employment by diasporas in Russia,” said Carlos de Sosa, an emerging-markets strategist and portfolio manager at Vontobel Asset Management in Zurich.Then there’s countries outside the ex-Soviet bloc that rely on Russia and Ukraine for fuel and food imports.
The countries with potentially the most still to lose are those that benefit from Russian and Ukrainian visitors as well as goods. That could be a longer term problem facing the likes of Egypt and Turkey, whose biggest trade partners include Russia. For Egypt, around 6.6% of its exports go to Ukraine and Russia, while it receives 40% of its tourists from the two countries. That will make it among the most affected, according to Standard Bank, Africa’s largest lender by assets. The crisis will also aggravate Egypt’s vulnerability to foreigners selling bonds, Fitch said.
Im willing to be an errand boy, a gardener or any form of odd job just to feed my children🙏🏾. They've been going to school and back on an empty stomach and that cripples me as a father. I humbly ask for any tinned food or grocer you don't need🙏🏾