U.A.E., Bahrain Among Crisis-Prone Emerging Markets, RBS Says

The United Arab Emirates and Bahrain were added to a group of developing economies considered most at risk of a debt crisis, according to a report by Royal Bank of Scotland Group Plc.

“Large-scale” external borrowing by sovereign-linked companies in the U.A.E and “modest” foreign-exchange reserves in Bahrain pushed the countries into RBS’s so-called crisis- prone list, which ranks economies on their ability to repay debt, Timothy Ash, head of Europe, Middle East and Africa research at the bank in London, wrote in a research note.

The global economic slowdown and seizure of credit markets following the collapse of Lehman Brothers Holdings Inc. in September 2008 triggered contractions in emerging economies from Russia to Brazil. Developing countries at risk of a debt crisis increased to 15 from 13 in 2009, suggesting a “more lasting” impact from the global recession, particularly in eastern Europe, Ash wrote in the note dated Jan. 4.