December 2, 2022

Laos debt downgraded as risk of Sri Lanka repeat rises.

Lorem ipsum dolor sit amet,sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, At vero eos et accusam et justo duo dolores et ea rebum. Lorem ipsum dolor sit amet, no sea takimata sanctus est Lorem ipsum dolor sit amet. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet. no sea takimata sanctus est Lorem ipsum dolor sit amet. no sea takimata sanctus est Lorem ipsum dolor sit amet. sed diam voluptua.

American credit rating agency Fitch Ratings has downgraded Laos’ issuer default rating, a sign of investor skepticism that the landlocked Southeast Asian country will be able to make its looming debt payments. The downgrade to CCC- from CCC—already well into junk territory—comes amid a deepening debt crisis that has brought Vientiane within arms-length of default.

Like many other frontier markets, Laos has been hit hard by inflation, spiking commodity prices and a harsh environment for international finance. In June, inflation in Laos reached a 22-year high of 23.6%, according to macroeconomic data firm Trading Economics. The country’s debt has snowballed to $14.5 billion, bringing the country to the brink of default, Le Monde reports.

More than half of Laos’ foreign debt is owed to neighboring China. Laos has been a key focus of China’s Belt and Road strategy, with new China-funded railroads and hydropower plants dotting its landscape. While China will be eager to recoup its loans, analysts say a Lao debt default could harm China’s reputation as a partner for the developing world and feed allegations of debt-trap diplomacy, Deutsche Welle reports.

close

Welcome to Frontier Markets News

Sign up to receive our frontier and emerging markets newsletter.

We don’t spam and we won't share your info!

Leave a Reply

Your email address will not be published. Required fields are marked *