Brazil, Mexico, Colombia, South Africa, India and Indonesia may be among the most vulnerable to a virus-related crisis, Anna Stupnytska, Fidelity International’s London-based head of global macro and investment strategy, said in a Bloomberg Television interview on Wednesday. She expects the coming months to be critical.

It isn’t just risky for governments. Moody’s Investors Service expects coronavirus-related disruptions and uncertainty to push emerging-market corporate defaults much higher in 2020.

Debt Relief

Forbearance on debt payments is the most popular idea to help emerging markets, although it would probably need to extend beyond 2020, according to Anna Gelpern, a law professor at Georgetown University who spent six years at the U.S. Treasury. A coordination group could offer standardized terms to all of a country’s creditors that automatically push out payments, she said.

Still, it will be no easy task to convince private creditors, especially those with large emerging-market exposure, to take a hit by deferring debt payments.

Zambia is asking restructuring houses for advice on how to handle its debt load, while Argentina has proposed a restructuring plan that includes a three-year payment moratorium.

“Countries that look to markets and are willing to engage market participants have found success in bridging the Covid financial shock,” said Hans Humes, chief executive officer of New York-based Greylock Capital Management, which has been involved in most emerging-market restructurings over the past quarter-century.

Bondholders already granted Ecuador a delay on coupon payments until August, which may save the government as much as $1.35 billion this year, as it deals with one of the region’s worst virus outbreaks and a sell-off in oil.

Even so, “the time and resource costs of pursuing market debt relief may outweigh the benefits,” Dylan Smith, a London-based economist at Goldman Sachs Group Inc., wrote in an April 17 note. Plus, “it is not clear that the fiduciary duties of large bondholders toward their investors would allow them to provide lenience to debtors, even if they privately support the initiative.”

Lee Buchheit, a four-decade veteran of the restructuring world, said forcing each nation to renegotiate on its own would only exacerbate the pain.