Armenia, Sri Lanka and Pakistan top the list of smaller emerging economies most vulnerable to refinancing risks, because they face a combination of large upcoming repayments and low foreign currency reserves, ratings agency Moody’s said.
"As international sovereign bonds mature in 2019 and 2020, governments in Sri Lanka, Armenia and Pakistan, and to a lesser extent Honduras and Kenya will be most exposed to more costly debt financing," Moody’s analyst Matthew Circosta wrote in a note.
"This can reduce the availability of debt and increase their debt burden, especially if local currencies depreciate," he said, Reuters reported.
Although the sovereign credit ratings of Sri Lanka, Armenia and Pakistan reflect how vulnerable they are, a further blow to their foreign exchange reserves may increase the risk of lower capital inflows and higher refinancing costs. This, in turn, may cast a shadow over credit ratings, Moody's believes.
Armenia has $500 million coming up for repayment in 2020, which translates to 3.9% of GDP, Moody’s calculated.
