Private creditors form group to negotiate African debt relief (1)

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Private creditors with more than $ 9 trillion in assets under management have formed a group to negotiate debt relief for African countries, warning of the risks of a comprehensive approach to the process.

The African Private Creditors Task Force will help African countries and other debt providers cushion the economic impact of the coronavirus pandemic on the continent, he said in a statement. declaration Friday. The group represents 25 asset managers and institutions that have financed countries and companies through Eurobonds, syndicated loans and commercial finance.

African countries are asking public and private creditors to temporarily suspend $ 44 billion in debt repayments this year in order to channel scarce resources to contain the spread of the coronavirus. Some investors fear that countries will unilaterally suspend payments, excluding them from debt markets and hurting creditors as well, said Lars Scourge, director of Farallon Capital Europe LLP and member of the group.

“There is a bit of concern in terms of the growing narrative pushing for this general status quo and even more concerning, debt cancellation in Africa,” Bane said in a telephone interview. “There is a real consensus that you have to take a case-by-case approach to get the best outcome for both borrowers and lenders. ”

Group members include Aberdeen Asset Management Plc, Amia Capital LLP, Ninety One UK Ltd., Pharo Management LLC and Greylock Capital Management LLC.

An investor deal that clarifies debtors’ positions on future payments could lower sovereign bond yields and help governments return to international capital markets soon. “Until this issue is clarified, none or very few African issuers will have access to the market in the near future,” Bane said.

Fault spectrum

The pandemic has raised the specter of a series of defaults in developing countries that have had to shut down their economies in an attempt to stop the spread of the virus. The demand for raw materials produced by many countries has fallen.

Debt advocacy group Jubilee Debt Campaign says private creditors will face losses as poor countries increase spending on health and social protection.

“Private creditors have lent high interest rates to poor countries because they claim the loans are high risk,” said Tim Jones, campaign policy manager. “The risk has come home and lenders have to accept that they can’t get big profits from these loans.”

(Updates with comments from the private creditor, Debt Relief Group)

To contact the reporter on this story:
Alonso Soto in Abuja at [email protected]

To contact the editors responsible for this story:
René Vollgraaff to [email protected]

Paul Richardson, Marton Eder

© 2020 Bloomberg LP All rights reserved. Used with permission.

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