There are 11 emerging nations with dollar debt trading at a risk premium of at least 10 percentage points — a distressed level that signals the threat of default. 

Lebanon, Sri Lanka, Zambia and others have already tumbled into default, locking the economies out of international capital markets until a deal can be struck with creditors.  – Bloomberg

Money Points:

• A shakeup is brewing in the $1.6 trillion universe of emerging-market sovereign debt.
• Government defaults are rising to a record in the developing world.
• The debate is growing frantic over how to solve these debt crises.
• The International Monetary Fund (IMF) is pushing for a new global bankruptcy framework.
• The IMF’s proposal would allow countries to restructure their debts in an orderly way.
• The proposal has been met with resistance from some investors and governments.
• Some investors are concerned that the proposal would give too much power to debtor countries.
• Others worry that it would make it too easy for countries to default on their debts.
• The IMF argues that its proposal would help prevent future debt crises.
• The debate over how to solve sovereign debt crises is likely to continue for some time.
• Investors will need to be vigilant as they navigate this uncertain landscape.
• The stakes are high, as sovereign debt crises can have far-reaching economic consequences.