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Nations in Sub-Saharan Africa have been locked out of international debt markets for 22 months now, and investors increasingly are betting the drought will soon end as countries seek funding for a slew of principal payments coming due this year and next.
South Africa is due to repay $1.5 billion in bonds this month, while Kenya has a $2 billion maturity in June. Second-half principal repayments will then come from Senegal, Ivory Coast and Gabon. Ethiopia was slated for December, but defaulted last month.
It’s already been a long wait for nations that need the funding, and for high-yield investors eager for new deals. The drought in issuance began in April 2022 and lasted throughout 2023. The last time Sub-Saharan African countries spent a full year without a single international bond sale was 2009, in the midst of the global financial crisis.
“There has been limited supply from higher-yielding EM countries so the demand may be robust for well-priced new issues with positive fundamentals,” said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS Asset Management Americas Inc. But issuance could be limited by still-elevated borrowing costs for most sovereigns in Africa, she said.
