Low-income countries are borrowing again – and at low rates – as investors scour global markets for decent yields. But low-income countries' access to private lenders comes with risks that should be highlighted at the outset, before they grow into imminent threats.
WASHINGTON, DC – Over the last five years, several low-income countries, such as Rwanda and Honduras, have issued their first-ever bonds to private foreign investors in London and New York. Until recently, that might have been unthinkable, so the new borrowers’ initial bond issue should be viewed as a sign of great investor confidence. But it should also sound some familiar warning bells.
WASHINGTON, DC – Over the last five years, several low-income countries, such as Rwanda and Honduras, have issued their first-ever bonds to private foreign investors in London and New York. Until recently, that might have been unthinkable, so the new borrowers’ initial bond issue should be viewed as a sign of great investor confidence. But it should also sound some familiar warning bells.