RI ranks high for likely debt defaults

RI ranks high for likely debt defaults

LONDON (Dow Jones): Defaults by sovereign governments declined
in the first quarter of 2000 amid generally benign financial
conditions in emerging markets, Standard & Poor's said in a
report.

But Romania, the Ivory Coast, Zimbabwe, Nigeria and Indonesia
top the list of possible default scenarios, the ratings agency
said.

Defaults on local-currency debt in the first quarter declined
to levels last seen in the early 1990s, it said.

The value of debt in default fell to an estimated $66 billion
in the first quarter, from $102 billion in the prior two years,
S&P said.

No new issuers defaulted during the first quarter, the agency
said, and the decline in the value of the debt in default came
via restructurings by Pakistan, Ecuador, Mongolia, Russia and
Ukraine.

But "new defaults may loom on the horizon later this year,"
the agency said. Zimbabwe, the Ivory Coast and Romania "are
vulnerable due to their fragile fiscal and foreign-exchange
positions," S&P said.

Meanwhile, Indonesia and Nigeria are less financially
distressed, but their high debt burdens still make them
candidates for private-sector burden-sharing imposed by the Paris
Club of official creditors, the agency said.

S&P noted that creditors and debtors are restructuring debt
"more quickly than was typical in earlier years."

"This represents an important milestone, one that will
continue to be tested if sovereign defaults increase over the
decade, as Standard & Poor's expects," the agency said.

"The market's evident capacity to manage debt workouts may
have an ironic consequence by reducing the impetus to global
financial architecture reform," it said.