African sovereign debt issuance hits $12.80bn in 2018
African sovereign have now issued $12.80 billion of Eurobond in 2018 ahead of a United States (US) Federal Reserve rate hike as investors continue to hunt for attractive yields.
Ivory Coast sold $2.1 billion of bonds maturing in 2030 with a yield of 5.25 percent and 6.625 percent due in 2048.
Egypt raised $4 billion with yields of 5.577 percent and 6.588 percent and 7.903 percent, respectively.
The bonds were issued at three maturities, with a five-year tranche and a 10-year tranche raising $1.25 billion each, while a 30-year tranche raised $1.5 billion.
The country got a $12 billion loan International Monetary Fund (IMF) after meeting stringent requirements raising gasoline prices and cutting down on subsidies.
Senegal tapped global debt markets for $2.2 billion with a yield of 6.75 percent with an average life of 29 years. A portion of proceeds from the sale will be used to redeem USD200mn worth of Senegal 2021 Eurobonds while the rest will be used to finance infrastructure projects.
“Despite the recent ascent in US Treasury yields to four year highs, investor demand for high-yield debt remained strong with the bid-cover ratio at the Senegal Eurobond sale of 4.3x which is in line with trends in recent African sales: Egypt (3x) Nigeria (4.6x) and Kenya (7x),” said Wale Okunrinboye, a fixed income and FX analyst at Ecobank.
South Africa plans to raise $3 billion of external debt in each of the next three fiscal years.
Kenya, East Africa’s largest economy plans to raise $3.2 billion from external sources in the fiscal year as drought and political instability threatens economic outlook.
“In terms of XOF paper issuances, the Eurobond sale displaces the need for Senegal to tap the regional debt market, where interest rates have climbed following the BCEAO’s commitment to reforming the interbank market by restricting bank access to its 7-day liquidity window. Consistent with this position, Senegal has not submitted any plans to issue XOF debt in 2018,” said Okunrinboye.
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