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27 Oct, 4 tweets, 2 min read
Yes, absolutely. An important point.

Also please note that the numbers here are cumulative loans not current exposures. At the same time, the WB numbers on exposures miss a lot of project finance.

1/x
Another important point -- both China and bond holders have lent to a (subset) of African countries at higher rates than the MDBs/ the traditional bilateral creditors. So the interest bill for those countries that have borrowed has increased faster than the stock of debt

2/x
A chart from a recent report by the Group of Thirty that (hopefully) highlights how not all low income countries are in the same position

(higher numbers on both the x and y axis are bad ... )

group30.org/publications/d…

3/3
p.s. the Bloomberg article that generated the initial chart used by the China Africa project

Zambia is really shaping up to be a test case.

Angola could have been, but the IMF kicked the can

bloomberg.com/news/articles/…

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More from @Brad_Setser

Brad Setser Profile picture
27 Oct
I am impressed @ChadBown

Seasonal adjustments are actually kind of important here (ag is the most important category ... and it is, umm, classically seasonal)

And, well, the interesting story in the September data is in the ag numbers

1/x
My (more modest) seasonal adjustment looks at the monthly data. The 'beans numbers were (as expected) solid. September basically made up for a weak start of the year. I hear the 'bean harvest came in early, and supplies in Brazil are by all accounts tight

2/x
Bean exports should top the 2017 base given the orders data USTR highlighted and current bean prices. Topping 2016 may be harder ...

(But don't forget 2018 -- the empty bar there isn't an accident; China showed that its state import companies control the market)

3/x
Read 8 tweets
Brad Setser Profile picture
26 Oct
Turkey's banks now have more foreign currency exposure to the government and the central bank than they have to Turkey's firms.

cfr.org/blog/changing-…
The Government of Turkey stepped up its local foreign currency denominated debt issuance this summer --

And the banks have lent a ton of fx to the CBRT, which normally would be viewed as a safe exposure but, well, the CBRT itself doesn't have much fx left
For the historically minded, Turkey's increased domestic dollar and euro denominated borrowing has some parallels with Mexico's issuance of tesobonos way back in the mid 1990s ...

Cuts borrowing costs, but generates substantial rollover risk
Read 6 tweets
Brad Setser Profile picture
26 Oct
The FT has looked into China's participation in the G-20 Debt Service Suspension Initiative. Looks like China only rescheduled $1.9b of $13.4b coming due this year -- if that's true, there were large net payments back China amid the pandemic

1/x
ft.com/content/bd73a1…
The total could go up though, as China and Angola are apparently (still) negotiating over the rescheduling of $6.7b (that includes funds due in 2021) -- a rescheduling required under Angola's IMF program

(Angola was always going to be the main beneficiary of the DSSI)

2/x
The lack of accurate data is a function of Chinese policy not to be transparent: in almost every country, the same three Chinese institutions (China Exim, CDB and ICBC) account for the bulk of exposure (the Commerce Dept has some zero rate concessional loans)

3/x
Read 6 tweets
Brad Setser Profile picture
26 Oct
Important story from the FT -- China accounts for $1.9b of the (very modest) $5.3b rescheduled through the G-20's DSSI. But $1.9b is modest v the (at least) $13.4b owed to China by DSSI countries ...

1/x
Of course, the benefits of the DSSI go mostly to the countries with the most debt -- and thus China's totals could go up if China's big three policy/commercial or hybrid lenders agreed to reschedule maturing claims on Angola

2/x
Discussion of Zambia is clearly hindered by a lack of good data -- I have been digging into this case, and a lot of China's exposure (China Exim and ICBC for example have a big hydropower loan) isn't directly too the government and thus isn't likely in the WB data

3/x
Read 8 tweets
Brad Setser Profile picture
25 Oct
Fair summary of the data on the impact of Trump's China tariffs by @bobdavis187 and @JoshZumbrun.

1/x
wsj.com/articles/china…
Has some interesting color on polysilicon (used in solar PVs) as well. Apparently the Chinese tariff on polysilicon wasn't lifted in the phase one deal.

And, well, China is hard market once China targets a given sector

2/x
There are some measures on the agricultural side that if sustained should raise US exports (approval of pork and beef exports, rolling back retaliatory tariffs on chicken parts). But always has a bit unclear (imo) how the phase one deal would raise exports of manufactures

3/x
Read 9 tweets
Brad Setser Profile picture
23 Oct
September's FX settlement data (settlement includes the PBOC and the state banks) provides the first obvious sign of renewed intervention -- settlement, adjusted for forwards, jumped $10b in September

1/x Image
A reminder -- China historically has needed to intervene more when the yuan is appreciating than when it is stable or falling (as controlling the pace of appreciation takes the PBOC's balance sheet)

2/x Image
To be sure the $10b in purchases in the settlement data in September is only visible purchase in the traditional intervention proxies in the last 3ms, and it remains is modest v the $150b plus trade and bond inflow -- there is more going on

3/x Image
Read 4 tweets

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