Defaults by governments rose in the first three quarters of 2002 compared with 2001 and will probably rise further next year, Standard & Poor’s Ratings Services announced in its updated sovereign default survey, which examines both rated and unrated national governments. The study notes that defaults on foreign currency bonds and local currency debt are rising again–and not just due to the Republic of Argentina’s (SD/–/SD) highly publicized collapse last year. So far in 2002, Standard & Poor’s has identified six new governments that have defaulted, compared with just one (Argentina) in 2001. Five other sovereigns have emerged from default and resumed normal debt service. Overall, Standard & Poor’s estimates that the number of sovereigns in default on bonds and bank loans reached 28 through the third quarter of 2002, up from 27 at the end of last year. The issuer default rate, at 13.9%, has increased slightly, but remains well below its peak of nearly 31.0% in 1990. The value of sovereign debt in default, at almost $133 billion, is nearly double last year’s total and is now at its highest level since 1994.
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