Bank of America Merrill Lynch Global Research said Saudi Arabia would require the largest adjustment to steady its debt
The yield-curve inversion will bring with it the threat of debt distress across the biggest emerging economies, and saddle Saudi Arabia and South Africa with “particular challenges,” according to Bank of America Merrill Lynch Global Research.
An inverted curve, historically a signal that a recession is looming, will eventually make sustainability of public debt “a more crucial topic” even as the current ultra-low interest rates will likely keep the spotlight off of solvency issues for now, analysts led by David Hauner said in a report on Monday.
The bank’s analysis of eight sovereigns in eastern Europe, the Middle East and Africa found sub-Saharan credits are “most at risk” while Saudi Arabia would require the largest adjustment to steady its debt. BofA focused primarily on commodity exporters, saying its main concern is with a prolonged downturn in global economic growth.