Credit Rating agency, Fitch, reports that many countries will default on debt payment this year, owing to economic effects of the coronavirus pandemic, the fall in oil prices and subsequent lockdown.
Fitch, one of the three big credit rating agencies, says it had downgraded a record 29 sovereign borrowers in the first four months of 2020. Three countries — Lebanon, Ecuador and Argentina — have defaulted this year, already matching a record set in 2017.
It currently rates Gabon, Mozambique, Republic of Congo and Suriname at CCC, where default is a real possibility, while Zambia is rated even lower at CC, where default is probable.
The average annual default rate for sovereigns rated at that level, is 26.5%, including those who receive this rating post-default, Fitch says, citing its past downgrade actions.
A few sovereigns that are downgraded to or assigned an original rating below CCC+ avoid a default, with only five having ever avoided this outcome.