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Countries in spiralling debt distress are set to deliver billions in profits to funds managed by asset managers including BlackRock, JP Morgan and other household names, new analysis from Christian Aid and Debt Justice shows.
The research, which has been shared exclusively with The Independent, shows that funds managed by BlackRock stand to make an estimated $2.1 billion profit from loans to countries in or at high risk of debt distress. Funds managed by Goldman Sachs are set to make $900 million, while those managed by JP Morgan are estimated to make $700 million. Funds managed by UBS and PIMCO are estimated to make around $500 million.
The methodology looks at 15 countries in or at high risk of debt distress – all of whom are struggling to balance their books, and sacrificing health and education spending to pay debt interest – and calculates that holders of their debt are set make profits of $60bn overall.
The biggest beneficiaries from this huge financial boon are private lenders, given that around 39 per cent of developing country debt is currently held by private lenders, according to analysis of World Bank debt statistics. Around 34 per cent of the debt is held by multilateral lenders like the World Bank and the International Monetary Fund (IMF), while 13 per cent is held by Chinese lenders, and 14 per cent held bilaterally by other governments.
Given limited publicly available data on the holders of government bonds – which is an asset class of government debt – researchers have based the analysis on bond ownership data that has been publicly disclosed to regulators. This represents around 23 per cent of bondholders.
Asset managers manage money on behalf of other private clients – unlike some organisations which might directly lend money to developing countries – but experts believe that this degree of separation does not mean that they should not be doing more to alleviate the situation.
“Asset managers are investing money on their clients’ behalf,” said Tim Jones, policy director at Debt Justice. “But the money does not end up in these funds by accident. And if these financial institutions claim that they cannot take part in sufficient debt relief because of their fiduciary duty [legal obligation to act in the best interests of their clients], then this is why we call on them to support legislative changes so that all private creditors have to take part in debt relief agreed by the international community, rather than relying on private creditors to take voluntary action, as the UK government does.”
The analysis from Christian Aid and Debt Justice is based on 15 countries low- and lower-middle income countries which are either rated by the IMF and World Bank as at high risk of “debt distress” – when a country is facing severe difficulty or is unable to meet its debt obligations – or having external debt payments over 18 per cent of government revenue.
The estimates are how much more profit bondholders will make compared to if they had lent to the US government – which is considered the global benchmark for government bonds – over the same time period. In order to model profits when there is limited information on when exactly bonds were purchased, analysts have used an assumption that bondholders have bought and held bonds since the point of issuance, despite this likely not being the case in reality. The price has fluctuated significantly since then – but if bonds had been bought more recently, when they have cost less, the rate of profit would in fact be even higher, according to Debt Justice.
All five asset managers mentioned here were approached for comment on multiple occasions. JP Morgan and Goldman Sachs did not respond by the time of publication, while UBS and PIMCO declined to comment.
A spokesperson for BlackRock said: “BlackRock is a long-term investor in emerging market sovereigns on behalf of our clients. As a fiduciary, the money we invest on their behalf is not our own; it is predominantly the money of ordinary people saving for retirement, and our responsibility is to act in their best financial interests at all times.”
The perilous journey to debt distress
The new analysis comes as the recent research from the IMF found that more than 30 countries around the world are currently at high risk of or already in debt distress, creating a spiralling global crisis that shows little sign of going away. Developing countries are currently spending an average of 15 per cent of government revenue servicing foreign debts each year, compared to just 6.6 per cent in 2010.
Many of these countries borrowed large amounts of money in the early 2010s at a time when interest rates were relatively low. But the cost of servicing loans soared as a result of global events including the Covid-19 pandemic, high energy prices prices following Russia’s invasion of Ukraine, the fall-out from climate-related disasters, and now expensive trade barriers with the US. Loans to private creditors are typically owed in foreign currencies, which means that if the value of your own currency decreases, the cost of debt further increases.
The cost of debt for developing countries is now at the highest level it has been since the debt crises of the 1980s and 1990s, with 3.3 billion people around the world living in countries that spend more on debt payments than on education or health.
Since 2022, data shows that developing countries have been paying more to creditors than they have been receiving in new loans – and with countries including the US, France, Germany, and the UK all announcing major cuts to overseas aid in 2025, the pressure on financial flows is set to increase yet further in the coming years.
The Independent has also previously reported how the world’s poorest and most climate vulnerable countries are currently paying more to service debts than they are in aid to address the climate crisis, collectively paying $37bn to creditors while receiving $32bn in climate finance. Analysts described the dynamic as a “vicious cycle” whereby low income countries are being forced to borrow more money to cover costs for an escalating crisis that they have barely contributed towards.
To pick one example of how these dynamics impact countries: Nigeria is set to pay an average of $13bn each year to external private creditors between 2025 and 2030, according to Christian Aid. That figure is roughly the same as the $13.4bn outlined in the country’s climate strategy to install solar power for 5 million homes and 200,000 small to medium-sized businesses, convert 30 million homes to clean cooking fuels, and eliminate methane flaring in the country’s oil industry within the same period.
How to help developing countries
Understandably, a big topic in development circles in recent months has been around how to help countries stuck in spiralling debt distress with some form of debt relief.
“Sovereign borrowers deserve at least some of the protections that are routinely afforded to debt-strapped businesses and individuals under national bankruptcy laws,” said World Bank Chief Economist Indermit Gill last year. “Private creditors that make risky, high-interest loans to poor countries ought to bear a fair share of the cost when the bet goes bad.”
Five years ago, the G20 introduced a debt restructuring mechanism known as the Common Framework, which was intended to provide low-income countries with coordinated debt restructurings that included broad creditor participation. However, in the time that has since passed, none of the four countries that applied have seen any debt written-off, and all remain with high debt payments.
At an African Union conference on the debt crisis held in May 2025 in Togo, leaders said that they had “welcomed the G20 Common Framework as a first step towards a more comprehensive approach to the sovereign debt restructuring” – but said that it had “not provided a pathway towards the quick restoration of debt sustainability, creating some considerable scepticism as to its potential to deliver effectively for highly indebted countries.”
For their part, some private creditors have been accused by some of working to oppose efforts to help developing countries struggling with debt. In Chad, for example, commodities giant Glencore was accused of blocking debt relief negotiations to such an extent that debts owed to the company were significantly paid off in the period in which negotiations took place. External debt payments were 16.8 per cent, 19.5 per cent and 18.4 per cent of government revenue across 2021-2023 – and payments to a consortium led by Glencore consortium accounted for 75 per cent of external debt payments in 2022 and 2023.
Meanwhile, South Sudan – by some measures the poorest country in the world – has been successfully sued for $657m by Afreximbank in the UK courts after defaulting on high-interest loans from the bank – and Afreximbank has also so far not agreed to participate in Common Framework negotiations with Ghana and Zambia, and is also involved in fractious debt restructuring negotiations with Malawi.
“The government cannot and should not prioritise maintaining onerous debt repayments over investments in the basic needs of South Sudan’s citizens,” said James Wani, South Sudan country director for Christian Aid. “Yet it seems that instead of our country getting debt relief to help deal with these crises, we are getting sued by the creditor. This is intolerable.”
Afreximbank has been repeatedly approached for comment with these claims. A spokesperson for Glencore said: “Glencore rejects this allegation. Over the years, Glencore and other creditors have engaged in multiple restructurings to help support Chad. The final restructuring took place in November 2022 and was welcomed by the IMF later that month.”
UK role in solving the problem
Beyond private creditors, many campaigners are targeting the UK government to do more to support debt relief. This is because the City of London’s importance as a global financial hub means that around 90 per cent of the debt belonging countries eligible for debt relief in the Common Framework are governed by English law.
“The majority of debts African and other low-income countries owe to private creditors are governed under English law,” explains Jess Salter, from the NGO Bond. “So Global South countries have rightly suggested that the UK and other jurisdictions that govern private creditors debt, use their powers to get private creditors to comply with more ambitious debt relief.”
“The Government could and – now more than ever, should – bring in legislation to ensure private creditors provide more debt relief enabling low-income countries to invest in areas such as health, education and tackling the climate crisis,” adds MP Sarah Champion, Chair of International Development Select Committee.
Despite significant pressure from NGOs, the government has not yet moved beyond encouraging voluntary participation in debt support from banks. “Our argument is that it should be mandatory and legally enforceable. A voluntary approach hasn’t worked over more than a decade, and there’s no evidence to show that it will work now,” explains Maria Finnerty, lead economist at the Catholic Agency for Overseas Development (CAFOD). “But the government is acting cautiously because they are terrified of upsetting the City of London.”
Two decades ago, NGOs including CAFOD successfully campaigned for wealthy governments to cancel developing country debt under the Jubilee 2000 Campaign – and the Catholic Church this year launched another Jubilee 2025 debt cancellation campaign that was spearheaded by the Late Pope Francis, to cancel developing country debt.
The tepid response seen to the campaign so far, according to Finnerty, is reflective of just how much geopolitics, and global priorities, has shifted in the years that have since passed.
“It’s a completely different cultural and political context: In 2000, we felt that we could make poverty history, and wealthy countries felt a real moral responsibility to other parts of the world,” she says – adding that the campaign was also less complex at the Millenium, given that most debts at the turn of the century were owed to other governments, rather than private financial institutions like now.
If lawmakers were able to come together and reform debt arrangements for countries, then it could have a truly transformative impact for global development, believes Finnerty.
“Private lenders are complicated, so it certainly feels like a long slog we have ahead of us, but if we can tackle this problem then we genuinely could solve one of the key problems that has been holding countries back for so long,” says Finnerty.
A HM Treasury spokesperson said: “Tackling unsustainable sovereign debt is an important international priority. We are committed to an international financial system that supports development outcomes and helps low-income countries address their debt vulnerabilities.”
This article was produced as part of The Independent’s Rethinking Global Aid project