Home Borrower Sovereign borrowing will remain high despite pandemic and geopolitical tensions, report says

Sovereign borrowing will remain high despite pandemic and geopolitical tensions, report says

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FRANKFURT, Germany, April 5, 2022 /PRNewswire/ — Sovereign borrowing will reach $10.4 trillion in 2022, nearly a third above the pre-COVID-19 pandemic average, S&P Global Ratings said today in its latest Global Borrowing Report published today on RatingsDirect:Sovereign debt 2022: borrowing will remain high due to pandemic and geopolitical tensions“).

For an interactive version of our global and regional borrowing forecasts, see; “2022 Global Sovereign Bond Outlook”.

“We expect borrowing to remain elevated, driven by high debt refinancing needs, as well as fiscal policy normalization challenges posed by the pandemic, high inflation, and polarized social and political landscapes,” said Karen Vartapetov, credit analyst at S&P Global Ratings.

The global macroeconomic implications of the ongoing military conflict between Russia and Ukraine will put additional upward pressure on government financing needs this year.

Tighter monetary conditions will drive up government financing costs. This will pose additional difficulties for sovereign states that have not been able to revive growth, reduce their dependence on foreign currency financing and whose interest bills are already extremely high.

For advanced economies, borrowing costs this year, while on the rise, are likely to remain below the effective interest rate on outstanding existing debt, allowing time to shore up budgets and focus on growth-enhancing reforms.

Other key findings from our projections of borrowing from commercial sources in 2022 by the 137 sovereign states we assess:

  • The stock of commercial sovereign debt will reach a record of $66.5 trillion by the end of the year, with the United States and Japan accounts for more than half.

  • The G-7 group of nations will continue to contribute 70% of the total outstanding commercial debt of all rated sovereigns.

  • High-quality sovereign bonds (rated “BBB-” and above) will represent the majority of total issuance.

The report is available to RatingsDirect subscribers at www.capitaliq.com. If you are not a RatingsDirect subscriber, you can purchase a copy of the report by calling (1) 212-438-7280 or emailing [email protected]. Ratings information can also be found on the S&P Global Ratings public website using the ratings search field located in the left column at www.standardandpoors.com. You can also call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Where stockholm (46) 8-440-5914

This report does not constitute a rating action.

Media Contact:

Miriam Hespanhol, new York (1) 212-438-1406
[email protected]

Analyst contacts:
Karen Vartapetov, PhD, Frankfurt + 49 693 399 9225
Roberto H Sifon-arevalo, new York +1 (212) 438 7358
Michelle Keferstein, Frankfurt (49) 69-33-999-104
Constance Marie Chamas, Mexico City

Key contacts:
Media Relations Americas: (1) 212-438-6667
[email protected]

Americas Customer Service: (1) 212-438-7280
[email protected]

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