Ratings agency S&P there were a record seven defaults on sovereign debt repayments in 2020, the first year of the coronavirus pandemic, although the vast majority of countries’ creditworthiness didn’t lose out.
Argentina, Belize, Ecuador, Lebanon, Zambia and Suriname — twice — failed to repay some tranches of their sovereign debt, S&P said in a report.
The defaulters “entered the year with already weakened credit metrics… and had little room to absorb the impact of the pandemic-induced recession”, it added.
Meanwhile “the COVID-19 pandemic and oil price collapse accounted for most” of the 26 ratings downgrades for state borrowers, the highest number since 2011.
“Unlike in 2011, the majority of downgrades in 2020 were of speculative-grade issuers,” emerging economies dependent on tourism like the Bahamas and Sri Lanka or on oil revenues like Nigeria and Congo-Brazzaville.
But across the board almost 80 percent of countries clung on to the credit rating they had held at the start of the year “despite the unprecedented economic, social and financial market turmoil”.
1.5 percent of nations managed an upgrade, 4.5 percent defaulted and 14.9 percent were downgraded.