The sovereign issuer-based default rate rose to a record high in 2020 against a backdrop of weakened sovereign credit profiles due to the Covid-19 pandemic.
A recent Sovereign 2020 Transition and Default Study’ by Fitch Ratings showed that five Fitch-rated sovereigns defaulted in 2020 Argentina twice, Ecuador, Lebanon, Suriname twice and Zambia up from only one in the previous year.
As a result, the sovereign default rate rose more than threefold to 4.2% from 0.9% in 2019. The previous high was 1.8% in both 2016 and 2017.
While downgrade pressures have eased this year, Fitch said its ratings indicate that more