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Big economies croak under $8-trilion debt

Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.

business Updated: Jan 04, 2012 21:50 IST

Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.

Led by Japan’s $3 trillion and the US’s $2.8 trillion, the amount coming due for the G-7 nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show.

Investors may demand higher compensation to lend to countries that struggle to finance increasing debt burdens, surveys show. The IMF cut its forecast for growth this year to 4% from a prior estimate of 4.5% as Europe’s debt crisis spreads, the US struggles to reduce a budget deficit exceeding $1 trillion and China’s property market cools.

The amount needing to be refinanced rises to more than $8 trillion when interest payments are included.

Borrowing costs for G-7 nations will rise by as much as 39% in 2011, based on forecasts. China’s 10-year yields may remain little changed, while India’s are projected to fall to 8.02% from 8.39%.

After Italy, France has most amount of debt, at $367 billion, followed by Germany at $285 billion. Canada has $221 billion, while Brazil has $169 billion, Britain has $165 billion, China has $121 billion, India $57 billion and Russia has $13 billion.


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