Latest analysis by the Institute of International Finance, IIF, has alerted to an emerging high dollar refinancing risk for Nigeria and Argentina where over three-quarters of redemption of their growing debt will be in US dollars.

Nigerian government has gone on a borrowing spree lately causing the Debt Management Office to raise alarm at the growing debt, both foreign and local. The Muhammadu Buhari government has in the last three years borrowed about N11 trillion. Growing Nigeria debt reflects  global trend.

In a new analysis, IIF said that government debt has risen most sharply in Brazil, Saudi Arabia, Nigeria and Argentina. The report noted that of the four countries, U.S. dollar refinancing risk is particularly high for Argentina and Nigeria, where over three-quarters of redemptions will be in dollars. About $900 billion is in U.S. dollar-dominated emerging bonds/syndicated loans that will mature by 2020.

Bloomberg quoting the IIF report said global debt rose to a record $247 trillion in the first quarter, more than $29 trillion higher than the end of 2016.

The debt-to-GDP ratio rose for the first time since the third quarter of 2016 but remains about four percentage points below the record high reached then, according to the IIF. The pace of the debt increase in the first quarter is a concern to the IIF as they note that the quality of the debt has declined, particularly in emerging markets.

Highlights

Non-financial corporate debt is now at record highs in Canada, France and Switzerland

The government debt-to-GDP ratio has surged to 101 percent in the U.S.

Financial sector indebtedness rose by $1.5 trillion to all-time high of $60.6 trillion

Household indebtedness in China, Chile and Colombia grew over 3 percentage points since Q1 2017, topping 49%, 46% and 30%, respectively

Emerging Markets

Total emerging market debt (ex-financials) rose by $2.5 trillion to a new record of $58.5 trillion in the first quarter — raising concern. On Monday, Kristalina Georgieva, chief executive officer of the World Bank, said in an interview, “with interest rates going up, attention on debt sustainability has to be stronger.”