Rédaction Africa Links 24 with ANGONOTÍCIAS
Published on 2024-02-28 02:13:59
After Ivory Coast and Benin, attention was focused on Kenya, where the transaction finalized in February could pave the way for Nigeria and Angola to return to the markets.
Analysts interviewed by Bloomberg about the ability of African countries to return to the financial markets believe that the period of exclusion is over, and Nigeria and Angola could be the next to issue debt.
“We have had a large number of external shocks culminating in the debt restructuring cases we are currently working on, but the remaining countries in Africa that have Eurobonds are not expected to default. We believe that this period has passed,” said asset manager Yvette Babb of William Blair in The Hague.
After Ivory Coast and Benin, attention shifted to Kenya, where the transaction completed in February could open the way for Nigeria and Angola to return to the markets, according to economist and asset manager Kaan Nazli of Neuberger Berman, who also believes that South Africa may return to debt issuances for the first time since April 2022.
In the last two years, sub-Saharan African countries faced interest rates above 10% if they wanted to issue public debt in international financial markets, which practically excluded them from accessing financing due to the high cost of interest rates reflecting the risk perceived by investors in the operation.
Ivory Coast was the first country to risk a return to the markets in January, after nearly two years where no country south of the Sahara wanted to issue debt, despite the region’s significant financial needs.
Abidjan took the risk and ended up issuing 2.6 billion dollars, about 2.4 billion euros, at an average interest rate of 8.5%, receiving offers totaling eight billion dollars, and following this issuance, Benin also took the risk of going to the markets, paying 8.3% for an issuance of 750 million dollars, for which it had offers of five billion dollars.
Although both countries have a credit rating below Moody’s investment recommendation, investors showed confidence in their ability to service the debt, which encouraged Kenya to also take the risk of going to the markets not only to issue new debt but also to refinance old debt maturing this year, contributing to meeting Goldman Sachs’ forecast that sub-Saharan African countries will issue around 4.5 billion dollars this year.
“After the continent spent part of last year trading as an over-indebted market, market indicators show that fears of other nations, beyond Ghana, Zambia, and Ethiopia, defaulting are a thing of the past,” writes Bloomberg.
The over-indebtedness recorded in recent years resulted in most cases from a combination of factors including the Covid-19 pandemic, the war between Russia and Ukraine, difficulties in importing cereals, increased central bank interest rates, inflation increase, and the economic growth reduction leading to an inability to honor external financial commitments.
However, despite the continued difficulties, market sentiment seems to have changed, partly due to the support provided by the International Monetary Fund (IMF) to the region, where half of the countries have a program and where the Fund has already channeled more than 50 billion dollars between 2020 and 2022, more than double what it mobilized in any decade since the 1990s.
Read the original article (Portuguese) on Angonoticias
