Where are EM debt risks greatest?

It looks highly likely that Tunisia’s government will this year follow in the footsteps of Sri Lanka and Ghana by defaulting on its external debts. Fortunately, public debt risks elsewhere don’t look as acute. But while the focus is on sovereign defaults, we think one underappreciated risk stems from private sector debts, particularly in those EMs where interest rates have risen sharply (e.g. Brazil, Chile and Hungary).