Finance

Frontier debt risks ‘going dark’ amid high costs and creative deals

Published

4 months ago

October 14, 2025

Frontier debt risks ‘going dark’ amid high costs and creative deals

LONDON/WASHINGTON, Oct 14 (Reuters) – The need for emerging economies to be more transparent about their debt is one issue uniting wealthy countries and multilateral lenders in a fractious, divided world where the international order and development finance face pressure.

The World Bank in June launched a call for “radical” debt transparency and the United States outlined transparency as a key goal for international financial institutions under President Donald Trump’s leadership.

But in the past several years, the riskiest of those nations – so-called frontier market countries – have been taking on more private, complex and “creative” debt arrangements that inadvertently undercut the visibility of the terms of their debt.

“Everybody loves transparency…(but) whatever the confidentiality clauses say, we are seeing a lot less of the documentation of commercial bank and other private lending,” said Anna Gelpern, a law professor at Georgetown University in Washington, D.C. who works on debt issues.

Collateralised lending to countries in strife that had dwindling options of raising funds causes particular issues, she added.

“That means that everything is going dark in terms of debt transparency.”

LIMITED ACCESS FOR BORROWERS

Countries from Panama and Colombia to Angola and Cameroon have sought to weather double-digit bond yields by seeking less conventional borrowing – from private placements to resource-backed loans or complex debt swaps requiring collateral.

While this is not on its own untoward, it means the terms of the debt – the cost, the collateral and even sometimes the tenure or amount – are not public.

This contrasts with international bond issuance where terms of the borrowing are published.

Some investors say the borrowing is a smart, sophisticated way to wait out times when bond markets might not be so easily accessible. But others warn this makes the total debt pile less transparent.

“With regards to collateralized borrowing, these kinds of hidden instruments, institutions like the IMF should be very worried about it, because they really then make the concept of preferred creditor very complicated,” said Reza Baqir, head of sovereign advisory at Alvarez & Marsal.

NET NEGATIVE, COST SAVING

The IMF estimated in a paper earlier this year that private lending to low-income countries outside international bonds as a percentage of their public and publicly guaranteed debt had risen to 10% by end-2023 from 6% at end-2010. Overall private lending – including international bond issuance – rose to 19% from 6%.

Victor Mourad of Citi said international bond issuance from Sub-Saharan African markets had been net negative – meaning governments raised less than they paid back – for the past three years.

Governments have sought cheaper funding sources – such as loans backed by development finance institutions such as the World Bank – and also more “creativity” via private placements and borrowing facilities in different currencies, though the alternatives they seek vary.

Nigeria has in the past secured oil-backed loans using crude oil cargoes as collateral. Angola opted for a $1 billion “total return swap” with JPMorgan, with privately placed bonds as collateral.

Aaron Grehan, co-head of emerging market debt with Aviva Investors, said Colombia and Panama had also avoided public debt markets, the former with dollar-bond buybacks and a total return swap, the latter with private placements.

Both had done well in these deals, he said, but will need to return to capital markets before too long due to the sheer amount they need. “You kick the can down the road,” he said.

When they return to public markets, investors will need to unpick their debt to try to determine what governments can sustainably borrow and repay.

“We have to do the homework and figure out if what is happening makes sense,” said Elina Theodorakopoulou, managing director and portfolio manager with Manulife Investment Management.

“If there is not enough transparency, that will be translated into the yield that you have to face if you were to access the market.”

Countries themselves say the deals have saved them money. Angola is still deciding on whether to extend its total return swap with JPMorgan, despite getting stung with a temporary $200 million margin call when oil prices slid.

“The cost of those financings is lower than the Eurobond,” said Dorivaldo Teixeira, general director of the public debt management unit at Angola’s finance ministry, while acknowledging the risks involved.

PUBLIC BORROWING, BUT HARDER TO ASSESS

At this week’s IMF and World Bank annual meetings in Washington, one of the issues the Global Sovereign Debt Roundtable will seek to tackle is the trouble of restructuring private debt.

That has snared Zambia and Ghana in default for longer than expected.

Sources said governments and advisors underestimated how hard it would be to unpick, determining who holds it, on what terms and whether there was collateral which can put one borrower ahead in the queue. This complicates debt reworks, in which all borrowers, ostensibly, must get equal treatment.

“It raises risks,” said Thys Louw, a portfolio manager with Ninety One. “Anything that’s marginally opaque adds complexity.”

Reporting by Libby George and Karin Strohecker, Additional reporting by Nell Mackenzie; Editing by Andrea Ricci

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Libby George is a London-based journalist on the Reuters emerging markets team. She was part of a team named as Pulitzer finalists in 2023, and who won the Selden Ring Award for International Investigative Reporting, for a series of stories revealing abuses by Nigeria’s military. After launching her career as a political journalist in Washington, D.C., she joined Reuters in 2015 covering oil, and from 2019-2023, she was senior correspondent and acting bureau chief based in Lagos, Nigeria.

Karin Strohecker is the London-based Global Chief Correspondent for Emerging Markets, leading a team that covers debt and economic issues and investment trends in developing nations around the globe. Having joined Reuters more than 20 years ago, Karin has worked in text and television in Frankfurt, Berlin and Vienna, covering major events such as IMF World Bank meetings in Washington, the World Economic Forum in Davos, OPEC meetings and the World Cup.

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Finance

These 3 Numbers Show Why It’s Likely for XRP to Hit $3 and Beyond | The Motley Fool

Published

2 hours ago

February 1, 2026

Press Room

These 3 Numbers Show Why It’s Likely for XRP to Hit and Beyond | The Motley Fool

XRP was above $3 in 2025, and it might soon be once again.

Can XRP (XRP 3.09%) hit $3 sometime in the next 18 months, given that its price is near $1.80 today?

I think it’s more likely to happen than not, barring any major market hiccup. There are three numbers in particular that each count as a reason.

Image source: Getty Images.

These numbers outline XRP’s paths to adoption

The first number, 10 drops, is denominated in a unit you’re probably not familiar with. It’s the XRP Ledger’s (XRPL’s) typical base transaction fee, and it’s equal to 0.00001 XRP per transaction. So even if XRP’s price reached $3, that fee would still be just $0.00003 — you and pretty much anyone else can afford to pay that fee over and over, and it will never add up to be more than a negligible amount.

In fact, its fees are so cheap that they’re usually lower than other dirt cheap chains, like Solana. In other words, for financial institutions that want to move money inexpensively, the network is a great choice for their needs, and if they decide to use it, they will first need to park that money on the XRPL, buying up some XRP in the process to use as working capital.

Today’s Change

(-3.09%) $-0.05

Current Price

$1.65

Key Data Points

Market Cap

$100B

Day’s Range

$1.56 – $1.70

52wk Range

$1.56 – $3.65

Volume

6.4B

The second number is also an important one for attracting financial institutions to the network, and it’s 1 XRP. The XRP Ledger requires a base reserve of 1 XRP in a wallet address, so there’s a small amount that must remain locked to reduce spam. This reserve is not a toll, but it does encourage adoption, as new users do not need to prefund much of anything in their wallet to get started, and users who might need many hundreds (or even tens of thousands) of different wallets won’t find the start-up costs to be prohibitive.

The third number is denominated in dollars, and it’s $45. That’s a common fee that people need to pay for an outgoing international wire transfer at a major U.S. bank. With a price that high, sending small amounts is a nonstarter, which likely prevents a lot of transfers that might lead to economic activity.

Using XRP slashes that cost to practically nothing, and it also ensures that the transaction takes moments instead of days.

How these numbers could eventually add up to $3

Obviously, these three numbers aren’t new in XRP’s history, nor do they guarantee that its price will go to $3. They’re just pieces of proof that the network will have an edge in getting financial institutions to use it to manage their tokenized assets and transfer money internationally.

For these to translate into a higher coin price, there needs to be actual adoption that creates more usage of the chain, which itself needs to lead to more demand for holding XRP. Ripple, the company that issues XRP, is hard at work driving that adoption by developing new capabilities for the XRPL, and interlinking its set of financial services to it. For instance, it now issues a stablecoin native to the XRPL, which creates a capital base that institutional investors can tap for liquidity using one of Ripple’s services.

All Ripple’s efforts benefit from the fact that cheaper movement of capital using XRP lowers the threshold for experimentation. When paired with its commitment to developing its on-chain capital base, more users will arrive seeking to tap that capital, and with them, more demand for XRP as a transactional asset and as a liquidity tool. This investment thesis is playing the long game, as accumulating the capital base needed to attract the biggest financial companies will take quite a while.

So, is getting to $3 likely? If the network’s adoption keeps compounding and attracts sustained usage, these numbers support the claim that XRP has a cost advantage big enough to thrive. Just don’t expect it to happen immediately because there are a lot of other factors affecting the coin’s price that could make the path slower.

Finance

Why This Artificial Intelligence (AI) Stock Is Gaining Attention From Institutional Investors | The Motley Fool

Published

14 hours ago

January 31, 2026

Press Room

Why This Artificial Intelligence (AI) Stock Is Gaining Attention From Institutional Investors | The Motley Fool

Alphabet is a favorite among a few hedge fund billionaires.

One artificial intelligence (AI) stock that has gained the interest of a lot of institutional investors lately is Alphabet (GOOGL 0.05%) (GOOG 0.02%). The stock was a top-three holding in the funds of several prominent hedge fund billionaires at the end of Q3, including Bill Ackman’s Pershing Square Capital, Chase Coleman’s Tiger Global Management, and Philippe Laffont’s Coatue Management.

Alphabet has returned to its role as an AI leader

It’s easy to see why these billionaires have been drawn to Alphabet’s stock. The stock was very cheap at the start of 2025, as some investors fretted that AI would pressure the company’s core Google search business. Those fears, however, proved to be overblown, and Alphabet has flipped the script to be viewed as one of the best-positioned AI companies moving forward.

Image source: Getty Images.

Alphabet’s strength lies in the fact that it has the most complete AI stack. This starts with its Tensor Processing Units (TPUs), which are custom AI chips it developed over a decade ago and have been tightly integrated into its ecosystem and improved upon over the years. While other companies are trying to catch up in the custom AI chip race, Alphabet’s TPUs are battle-tested and highly regarded, giving it a structural cost advantage when it comes to running AI workloads. It has even begun to let customers begin to deploy its chips through its Google Cloud cloud computing business, creating another revenue stream.

At the same time, Alphabet has trained its world-class Gemini large language model (LLM) on its chips. Gemini is now considered one of the world’s best AI models, and Alphabet has infused its capabilities throughout its products. In addition to its stand-alone app, which has been gaining market share, it’s also helping drive growth in Google Search through newer AI-powered features, such as AI Overviews, Lens, and Circle to Search. Perhaps the biggest game changer, though, is AI Mode, which lets users easily toggle between traditional search and an AI chatbot without having to switch apps.

Today’s Change

(-0.05%) $-0.16

Current Price

$338.09

Key Data Points

Market Cap

$4.1T

Day’s Range

$332.26 – $339.93

52wk Range

$140.53 – $342.29

Volume

880K

Avg Vol

35M

Gross Margin

59.18%

Dividend Yield

0.25%

Meanwhile, Alphabet’s distribution and ad network advantages remain. Through its ownership of the Chrome browser and Android smartphone operating system, along with a search revenue-sharing deal with Apple, the company is the gateway to the internet for most people. Meanwhile, its massive ad network can help it easily monetize both search and AI chatbot users.

Is Alphabet stock still a buy?

While not the bargain it was a year ago, Alphabet’s stock is still reasonably valued, trading at a forward price-to-earnings (P/E) ratio of around 25.5 times 2026 analyst estimates. Given that its AI tech stack advantages should just grow with time, the stock is still a buy at current levels.