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AFTER LEBANON, AN ARAB COUNTRY IS AT RISK OF DEFAULTING ON ITS DEBT
Credit rating agency Fitch said on Tuesday that the economic shock caused by the Corona virus pandemic and the collapse in oil prices could result in a record number of borrowing countries defaulting on their debts this year.
Fitch, one of the three major credit rating agencies, said it lowered the credit ratings of an unprecedented number of countries that reached 29 in the first four months of 2020.
Three countries, Lebanon, Ecuador and Argentina, defaulted this year on their debts, which is already in line with a record number in 2017.
The agency currently ranks Gabon, Mozambique, the Republic of the Congo and Suriname at CCC, where there is a high probability of tripping, while Zambia is ranked at the lowest CC, where tripping is possible.
Fitch said that the annual rate of default for countries ranked at that level is on average 26.5%, including those that get this classification after default, noting decisions taken in the past to reduce the rating.
She said that El Salvador, Iraq and Sri Lanka are also at risk, and the three countries are currently classified at B- but are at risk of downgrading the rating to CCC, where defaults become more likely.
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