The external indebtedness and creditworthiness of countries in the east Asian and pacific region

This article examines recent trends in the East Asia and Pacific region's external indebtedness, debt servicing capability, and creditworthiness. Despite the fact that the East Asia and Pacific region is regarded as the most creditworthy of all developing country regions, there are some indications that if borrowings continue to grow at the current pace, particularly in relation to debt servicing ability, the region may begin to encounter more debt repayment problems. In addition, this paper investigates the relationship between country credit ratings for the twenty largest developing country borrowers and interest rates on new obligations. The observed relationship between country creditworthiness and interest rates, while inverse, was not as strong as financial theory would suggest.