High Africa yields raise debt service concern, AfDB says

 

Some African countries are overpaying for dollar bonds, raising concern about debt-service costs at a time when currencies are weakening against the greenback, according to the African Development Bank.
High interest rates make the continent’s bonds attractive to investors despite questions about the true extent of the debt loads of countries such as Zambia and the Republic of Congo.
“Raising a 30-year bond at a yield of 950 basis points that’s very high,” AfDB President Akinwumi Adesina said in an interview in Johannesburg on Monday. Angola last week raised $1.25 billion selling a Eurobond due in 2048 at 9.375 percent.
Dollar bonds sold by African governments now yield 6.91 percent on average, compared with 5.66 percent in early January, Standard Bank Group Ltd. Indexes show. That compares with 6 percent for emerging markets generally. African and emerging-market Eurobonds have sold off heavily in the last three weeks as the dollar strengthens and U.S. rates rise.
African nations have sold $18.3 billion of euro and dollar-denominated debt so far in 2018, already beating full-year records. Nigeria, Kenya, Senegal, Egypt and Angola have all issued 30-year tranches. Ghana is planning to sell as much as $2.5 billion of Eurobonds in 2018 and South Africa $3 billion.

Bloomberg