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Fitch, a credit rating agency, said on Tuesday that the economic shock caused by the Corona virus pandemic and the collapse in oil prices could cause a record number of borrowing countries to default this year.
Fitch, one of the top three credit rating agencies, said it cut the credit ratings of 29 countries unprecedentedly in the first four months of 2020.
Three countries – Lebanon, Ecuador and Argentina – have defaulted on their debts this year, which is already in line with a record number in 2017.
The agency currently ranks Gabon, Mozambique, Republic of Congo and Suriname on CCC, where there is a high potential for default, while Zambia is the lowest CC, where default is likely.
Fitch said the annual default rate for countries rated at this level is on average 26.5%, including those that achieve this rating after default, referring to decisions made in the past to lower the rating.
She said El Salvador, Iraq and Sri Lanka are also at risk and all three countries are currently rated B-, but are threatening to revert to CCC as default becomes more likely.
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