The recent half-percentage-point interest-rate cut by the U.S. Federal Reserve could open the door for African nations, including Nigeria and Angola, to issue new debt, according to a report by BancTrust & Co., a London-based investment bank.
Thank you for reading this post, don't forget to subscribe!The Fed’s unexpected policy easing is projected to drive yields lower in sub-Saharan Africa, making the international capital market more attractive for debt issuance. Nigeria, Africa’s largest economy, is expected to issue a eurobond soon after the Fed’s decision, capitalizing on improved market conditions.
Angola may follow suit with a eurobond issuance, particularly if yields on its mid- to long-term debt approach 9%, close to the pricing of its previous eurobond offerings. Additionally, Angola might explore a debt-for-nature swap.
Kenya, however, is expected to refrain from tapping international bond markets in the near term due to domestic financial pressures, including high debt-servicing costs and strained foreign reserves. Instead, the East African nation is likely to rely on concessional financing until investor sentiment improves under President William Ruto’s administration.
In Nigeria, a successful eurobond sale could encourage major financial institutions and companies, such as Access Bank Plc, FBN Holdings Plc, and SEPLAT Energy Plc, to also explore international debt markets.
