Close to Bankruptcy

After years of bitter court battles with creditors, Argentina has defaulted on its debt, according to rating agency Standard & Poor’s. 

After failing to come to an agreement with creditors from its previous default in 2001, the country missed necessary bond payments on July 31, triggering the default announcement. 

Argentina is not the only country that has struggled, or even failed, to pay its debt in recent years. It is hardly the only country with a severely impaired credit rating either. 

Alongside Argentina, Moody’s currently lists 10 other countries with a rating of Caa1 or worse. A Caa1 rating is several notches below Ba1, which still carries substantial credit risk. Based on ratings from Moody’s Investors Service, these are the 11 countries at risk of default.

Click here to see the countries most likely to default.

The countries with the lowest credit ratings significantly differ from one another. They span the globe, ranging from Greece and Ukraine in Europe, to Pakistan in Asia, to Ecuador, Venezuela, and Belize in Central and South America.

These nations also suffer from vastly different problems. Some nations, such as Ukraine and Egypt, owe their recent downgrades to political conditions. Others, such as Belize and Ecuador, have actually been upgraded in recent years based on their improved financial positions.

When a government has a great deal of debt relative to the size of its economy, its credit rating may also be lower. Three of the nations potentially at risk of default had among the world’s highest debt levels, at 120% of GDP or more based on 2014 estimates. 

According to the International Monetary Fund (IMF), Greece’s debt is projected to hit nearly 175% of GDP by the end of this year, more than that of any other nation in the world except for Japan.

However, not all countries with low ratings necessarily have a large amount of outstanding government debt. For example, Ecuador’s government debt, according to the IMF, was forecast to total just 24.8% of GDP in 2014 — an exceptionally low amount. 

In many cases, these countries simply do not regularly access international bond markets, either because of small financial sectors or because of debt-restructuring agreements.