New analysis from Christian Aid and Debt Justice reveals that private investors, including funds managed by BlackRock, JP Morgan, and Goldman Sachs, are poised to make billions in profits from countries facing severe debt distress. The research, shared exclusively with The Independent, estimates that BlackRock-managed funds could profit $2.1 billion, Goldman Sachs $900 million, and JP Morgan $700 million, with UBS and PIMCO around $500 million each.
The study examined 15 low- and lower-middle-income countries either at high risk of debt distress or with external debt payments exceeding 18 per cent of government revenue. Overall, holders of these countries' debt are projected to earn $60 billion in profits. Private lenders hold about 39 per cent of developing country debt, while multilateral lenders hold 34 per cent, Chinese lenders 13 per cent, and other governments 14 per cent.
Due to limited public data, researchers used disclosed bond ownership data representing about 23 per cent of bondholders. Profits were calculated as the difference between returns on these bonds and a benchmark of US government bonds. If bonds were purchased more recently at lower prices, profits would be even higher.
Tim Jones, policy director at Debt Justice, called for legislative changes to compel private creditors to participate in debt relief. He stated, “Asset managers are investing money on their clients' behalf. But the money does not end up in these funds by accident. We call on them to support changes so that all private creditors have to take part in debt relief agreed by the international community.”
A BlackRock spokesperson said the firm is a long-term investor acting as a fiduciary for clients, predominantly ordinary people saving for retirement, and must act in their best financial interests. JP Morgan and Goldman Sachs did not respond to comment requests; UBS and PIMCO declined.
The analysis comes as IMF research shows over 30 countries currently at high risk of or in debt distress, with developing countries spending an average of 15 per cent of government revenue on foreign debt servicing.
