Bloomberg: Loans for Poorest Countries Become Most Expensive Since 1989
In 2025, the external debt of developing economies reached a record $9.4 trillion
The world's poorest countries are facing the highest cost of borrowing in several decades.
The average rate on new private loans for low-income states stood at 8.2%, while for new bonds, it was 9.4%. For developing countries with stronger economies, the average yield on new bonds was lower, at 5.5%.
According to the World Bank, excluding China, the growth in external debt for low- and middle-income countries in 2025 was primarily driven by private financing. The net inflow of borrowed funds approached $360 billion.
Some states continue to enter the bond market. In April, the Democratic Republic of the Congo conducted its first issuance of dollar-denominated bonds worth $1.25 billion. The yields on the two bonds were 8.75% and 9.5%—some of the highest coupon rates of 2026.
By mid-August, Angola had placed twice as many bonds as the previous year, when the issuance volume was $2 billion. Indonesia and the Philippines also exceeded their placement figures for 2025.
The World Bank notes that many governments are issuing new bonds to buy back previous obligations or spread out payments over time. However, the organization estimates that this approach does not lead to a significant reduction in debt burdens.
Since 2024, Argentina, Colombia, Angola, Nigeria, and Senegal have increasingly used total return swaps to manage their obligations. The volume of such transactions ranged from $1 billion to $9.3 billion. The instrument allows for quick access to currency but is associated with risks related to collateral, refinancing, and disclosure.
