Final answer:
When countries experience economic or currency stress, lower local currency financing costs are not typically observed; instead, costs tend to rise due to higher perceived lending risks. Other events, such as heightened risks, the occurrence of bad debts, possible new profit opportunities, and potential cancellation of sales like aircraft equipment, can happen.
Step-by-step explanation:
When countries or regions experience currency and/or economic stress, all of the following events can take place except lower local currency financing costs. During economic stress, there is usually an increased exposure to certain risks such as the risk of default, liquidity risks, and market risks. There can also be new profit opportunities for investors looking to capitalize on currency fluctuations or distressed assets. Bad debts are also likely to increase, arising from borrowers' inability to service their debt. Additionally, significant economic stress might lead to cancellation of large-scale sales transactions, such as aircraft equipment sales, due to reduced demand or funding difficulties.
However, it is not typical to see lower local currency financing costs during times of economic stress. In fact, interest rates often rise to compensate for the increased risk of lending in an unstable economy. Economic lessons from examples like the Asian financial crisis demonstrate that when domestic currency value falls, especially in economies with mismatched currency lending and borrowing, the financial stress compounds as banks struggle to cover foreign denominated debts with depreciated local currency. On the other hand, countries that manage their economies and banking sectors prudently, such as occasionally seen in the U.S. where banks tend to match currency assets and liabilities, can avoid systemic issues.