"Ethiopia\u2019s credit risk ratchets higher after Moody\u2019s downgrade"

" Ethiopia\u2019s credit risk ratchets higher after Moody\u2019s downgrade \r\n\r\nEthiopia\u2019s sovereign-risk premium has hit a record high after last week\u2019s downgrade deeper into junk by Moody\u2019s Investors Service.\r\n\r\nThe extra yield investors demand to own Ethiopia\u2019s dollar debt has widened to a spread of 4,089 basis points over Treasuries, according to JPMorgan Chase & Co. data. The spread had narrowed at the start of the year. Bonds trading with a spread of more than 1,000 basis points are viewed as distressed by credit markets.\r\n\r\nEthiopia\u2019s foreign issuer rating was downgraded by Moody\u2019s to Caa3 from Caa2 on Friday. The local issuer rating was affirmed at Caa2, while the outlook was moved to stable from negative. The country has $154 million in bond and loan payments due in the next year, based on data compiled by Bloomberg.\r\n\r\n\u201cThe main driver behind the downgrade of Ethiopia\u2019s FC rating is the increasingly high likelihood of default on FC-denominated private-sector debt because of strained external liquidity, for which the government has sought relief under the G20 Common Framework for debt treatment,\u201d said Sam Singh-Jami, Africa Strategist at Rand Merchant Bank, in a note to clients.\r\n\r\nLast week\u2019s downgrade reflected Moody\u2019s expectation that losses for private-sector creditors were likely to be in the range of 20%-35%, \u201cwhich is lower than the historical average of losses for sovereigns of about 50%, because the government primarily seeks liquidity relief,\u201d she said."

"Ethiopia\u2019s credit risk ratchets higher after Moody\u2019s downgrade"

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