Investors bet on Nigeria’s Comeback to International Debt Markets

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Sub-Saharan African nations, facing a 22-month exclusion from global debt markets, are now attracting attention from investors who believe the drought might end soon.

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The impetus behind this shift is the need for funding as countries grapple with significant principal payments due in 2024 and 2025.

South Africa and Kenya, with looming bond repayments of $1.5 billion and $2 billion, respectively, lead the pack.

However, high-yield investors and nations alike have endured a prolonged wait for fresh deals, with no international bond sales in the region throughout 2023, marking the first such hiatus since 2009.

For South Africa, Kenya, Angola, and Nigeria, among others, the potential to tap into the market at yields around 10% has been highlighted.

Kenya, in particular, is viewed as a frontrunner to break the drought, with its dollar debt yields narrowing significantly.

Despite optimism, Moody’s Investors Service maintains a negative outlook for Sub-Saharan African sovereign issuers in 2024, citing risks associated with large debt burdens and challenges in refinancing at affordable rates.

Ethiopia’s recent default serves as a cautionary signal, emphasizing the elevated risks in the region.

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