$25bn of Africa’s sovereign debt matures next year
As much as twenty-five billion dollars of sub saharan Africa sovereign debt will mature next year with total maturities in the five years from 2018 expected to reach sixty two billion dollars according to data by FT and Thomson Reuters.
After 2018, $1bn of Africa’s sovereign debt will be due for settlement the following year and $7.5bn in 2020 and 2021 and $11bn will mature in 2022.
The value of sovereign debt maturing will slow to about $4bn in 2023 and rise to $15bn in 2024.
Ghana became the first west African nation to enter the international bond markets a decade ago this month, kicking off of a flurry of debt-raising in the world’s least developed region. Now the bills are coming due.
Investors’ rush into emerging market debt since the start of this year should be a boon for African finance ministers seeking to refinance — sub-Saharan country debt with a total return of 10.9 per cent has outperformed the EM average of 9.1 per cent so far this year, according to Bloomberg data.
But the big question for investors and finance ministers is whether the current bullish market conditions will hold for the coming wave of new debt sales. Since the start of this year sub-Saharan African debt has “put in a stellar performance”, says Sergey Dergachev, senior portfolio manager at Union Investments. “The question is whether this [rush for yield] is fundamentally justified.”
A cause for concern is that the region’s economy is still fragile, feeling the repercussions of the mid-decade slump in oil and commodity prices.
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