🌟 Editor's note

Editor’s Note | Week of 12 August 2025

You might want to update your briefing pack if you’re still blaming China for the emerging market debt crisis. A new report by Debt Justice UK, unpacked in Carter’s latest slow read, reveals that developing countries now send almost three times as much in repayments to private creditors, think bondholders, investment banks, and commodity traders, as they do to Chinese lenders.

Yet the “debt-trap diplomacy” narrative has long dominated the headlines. It’s easy to see why: China’s Belt and Road made for dramatic visuals and policy soundbites. Private debt markets? Not so much. But behind the opacity and anonymity, private lenders are enforcing harsh terms and dragging out restructurings, adding fuel to a slow-burning crisis that’s choking fiscal space and leaving little room for health, education, or green transition.

And what does this mean for trade? Quite a bit. The rising cost of capital, paired with rigid repayments, means many countries are being forced to cut imports, delay infrastructure projects, and postpone trade facilitation reforms. It also tilts the scale away from local SMEs who can’t access the same credit lines or FX protections. In other words, the debt squeeze is a trade squeeze.

We’re keeping close tabs on these linkages across our pages:

• France just became the first G7 country to fully adopt UNCITRAL’s MLETR into law—strengthening the legal basis for digital trade documents. This isn’t just a policy footnote: it’s a foundation for mainstreaming paperless trade and improving access to finance.

• Eleanor Hill’s piece on ‘creducation’ explores how banks are pooling credit intelligence to shine a light on counterparties that traditional rating agencies ignore. With over 90% of suppliers unrated, this kind of shared visibility is a quiet revolution in how risk is priced.

• And as the digital tug-of-war over Bills of Lading continues, our latest trade explainer dives into why trust, not tech, is the real missing piece. (If you’ve ever chased down a cargo release across five time zones, this one’s for you.)

Packed in this newsletter:

• 🧾 Slow Read: Private lenders, not China, are driving the emerging market debt crisis — Carter Hoffman breaks down new data from Debt Justice UK, challenging the China “debt-trap” narrative and showing how private bondholders are absorbing the largest repayments from low-income countries.

• 📜 France embeds UNCITRAL MLETR into domestic law — With its new decree, France joins a small but growing group of countries adopting legal frameworks for digital trade documents.

• 🧠 eBL trust gap — In our digital trade article this week, we explore why bills of lading are still mostly paper, and how legal trust, not just tech, is the missing piece of the puzzle.

• 💸 Corporate treasuries are buying Ether — ETH is climbing, and treasury desks are playing a role. Is it a diversification hedge, or a sign of volatility creep?

• 🎨 Art-backed ABS in Switzerland — A CHF 100 million credit note backed by blue-chip art is launching, pushing the boundaries of real-world asset securitisation.

• ⚡ GoCardless launches AI-enhanced same-day settlement — Fintech upgrades Direct Debit flows with predictive AI for faster payouts.

• 🎧 Podcast: “Unlocking Scale: Can Supply Chain Finance Reach Its SME Tipping Point?” — Recorded at our first-ever Breakfast Club in London, featuring Sullivan and a sharp audience. Who really grows SCF: banks, fintechs, or something new?

• 🎬 Video: OTP Group’s Uzbek Expansion — A short interview from Tashkent with Ipoteka Bank’s Chairman on digital advantage and regional growth strategy.

• 🎥 Reels:

  • Simon Cook (Sullivan) explains core trade finance instruments

  • Zulema Townsend (A&O Shearman) on mandatory supply chain disclosures

  • Lorna Pillow (ITFA) introduces URTEPO rules for digital trade obligations

Until next week,

– Deepesh, Eleanor, Joy, Carter

Slow read

For more than a decade, the global narrative surrounding sovereign debt in developing countries has largely pointed a finger at China. 

The image is familiar: far‑flung infrastructure projects funded by Beijing that eventually leave poor nations ensnared in what’s commonly referred to as “debt‑trap diplomacy”. This framing has coloured political speeches, media coverage, and even parliamentary submissions, yet a strikingly different story emerges from a new study by Debt Justice UK. 

That study suggests that lower‑income countries actually direct nearly three times as much repayment to private lenders as they do to Beijing. 

Revealing the data: Who is being paid and how much

Debt Justice UK’s analysis draws on World Bank statistics covering 88 lower‑income countries between 2020 and 2025. In that period, 39 per cent of external debt repayments went to private lenders (i.e., bondholders, international banks, commodity traders, etc.) while just 13 per cent were paid to Chinese public or private lenders. Multilateral institutions claimed 34 per cent, and other governments around 14 per cent. 

In sheer financial terms, private creditors now absorb significantly more of these countries’ scarce revenues than any other category. According to an UNCTAD report, a total of 3.3 billion people live in countries that now spend more on interest payments than on either education or health.

The data are not confined to isolated regions. Other analyses illustrate how the story holds across Africa. One Debt Justice campaign briefing notes that African governments owe three times as much to Western private creditors as they do to China, and pay nearly double the interest. 

These figures overturn the prevailing lens through which so much of the debt crisis has been viewed.

Why the China-centric narrative took root

Yet why does the Chinese creditor dominate public consciousness so completely? The answer lies in a combination of symbolism, convenience and selective observation. 

Sri Lanka’s Hambantota Port, a financially underwhelming infrastructure project that ultimately ended up managed by a Chinese company, is still the most resonant example, appearing to confirm worst-case suspicions. 

Meanwhile, the rapid roll‑out of the Belt and Road Initiative (China’s famed infrastructure development project that stretches across continents and has cost billions of dollars in investment) offered ripe imagery for media, think tanks and foreign ministries eager to illustrate China’s rising global footprint. 

With this picturesque villain as a comparison, it is little wonder that private bond financings (which are opaque, largely anonymous, and frankly a little dull) have not been given the same attention in the media, even where their impact is more pronounced.

Trade digest

Paper built global trade and global fraud. Can digital do better?

Bills of lading underpin the movement of goods by sea, serving as a receipt, a contract of carriage, and a document of title. They are as essential to container ships as they are to fishing boats and cruise liners. Yet, despite their central role, most are still issued on paper. Efforts to digitise them have so far faltered.

Before the bill of lading, cargo records were little more than a ship’s register, with a clerk noting goods loaded and unloaded. This was workable when merchants travelled with their cargo. As trade expanded and shippers stayed onshore, the need for independent proof of goods led to the widespread use of bills of lading by the sixteenth century, often detailing quantity and condition and frequently appearing in shipments to and from Spain.

Paper has served global commerce for centuries, but its inefficiencies are glaring in a digital economy. Physical documents must pass between shippers, carriers, banks, ports, and other intermediaries, creating costly delays and administrative bottlenecks.

Treasury and Payments Digest

#TTPulse

Global plastics treaty talks end without agreement

The latest round of negotiations for a legally binding global plastics treaty ended without agreement on Friday, as divisions among member states stalled progress on core provisions. Convened under the United Nations’ Intergovernmental Negotiating Committee (INC), the two-week meeting in Geneva marked the fifth session in a process launched by the UN Environment Assembly in 2022.

✈️ New lending platform adds $1.8bn capacity to aviation finance market

Aviation finance capacity has expanded with the launch of Merit AirFinance, a new lending platform focused on debt solutions for airlines and aircraft leasing companies.

Merit will provide funding for both new and used aircraft, offering facilities that range from single-asset loans to larger multi-aircraft structures. The business enters the market with more than US$1.8 billion in committed capital, managed through separately administered accounts.

Since 2020, the company behind Merit has issued over $5 billion in aviation loans, amid a wider rise in non-bank capital flowing into the sector.

🪙 Finastra, NTT DATA expand cloud lending in APAC and LATAM

🔸From August 2025, NTT DATA will manage Finastra’s Lending Cloud Service to speed deployments and boost automation for banks.

🔸Move targets fast-growing cloud markets like Vietnam, Hong Kong, and Singapore to modernise lending infrastructure.

💰 Wegagen Bank secures $85m trade finance guarantee

🔸August 2025 deal with Trade and Development Bank Group - TDB Group and African Export-Import Bank (Afreximbank) boosts Wegagen’s capacity to confirm LCs and issue guarantees, widening trade finance access for Ethiopian businesses.

🔸Facility aims to close Africa’s $100bn trade finance gap and support SMEs, value chains, and AfCFTA-driven cross-border trade.

🌍 WorldFirst wins Malaysian licence for SME cross-border payments

🔸From August 2025, Ant International’s WorldFirst can offer international payment and FX services in Malaysia under a Class A licence.

🔸Move supports Southeast Asian SMEs in digital trade, part of WorldFirst’s 60-plus global licences and regional growth strategy.

🗓️ Upcoming events

Featured events by TTP

Partner events

Multimedia from Trade Treasury Payments

Videos

Reels

Podcasts

🏆 GAP of the Week: Patrik Zekkar, Enigio

🌟 Daily Mission:

• Move forward! Go to bed every day with more knowledge and progress than when you woke-up.

🤳 Behind the scenes:

• Five months to prepare for my first cross-country ski race: the 70km Marcialonga Ski Classic, which, alarmingly, looks mostly uphill. All thanks to a poorly considered New Year’s bet made far too late at night!

🪷 Life Mantras:

• Don’t wait for perfection or think you can predict everything. If you believe you will be 80% right then go, and handle issues as they come.

• Doing nothing is also a decision.

• If you step in poop, stand still, moving around will only make it more messy.

📋 Hidden facts:

• It’s impossible to stay fully focused watching Tour de France on TV (but please don´t tell my wife...)

Did You Know? Lower-income countries now spend more on interest payments to private lenders than on either healthcare or education, according to UNCTAD. Despite public focus on Chinese lending, private bondholders and banks account for nearly 40% of debt repayments, nearly triple that of Chinese creditors. (Source: Debt Justice UK, UNCTAD)

Till next time,

Trade Treasury Payments (TTP)