Global ratings agency Moody’s expects six sub-Saharan African countries to issue debut bonds in the international markets within the next few years. It has identified Angola (Ba3 positive), Cameroon, Kenya (B1 stable), Tanzania, Uganda and Mozambique (B1 stable) as potential Eurobond issuers, saying that most of these countries are planning to raise at least USD 500mn each, which will make them eligible to be included in JP Morgan's Emerging Market Bond Index (EMBIG). This will not only help raise their visibility with a larger pool of investors, but will set a benchmark yield for local corporations and banks that wish to issue internationally.
Moody’s noted that primary issuance by African sovereigns has reached USD 8bn since the beginning of 2013, which is its highest level ever. Issuers include Egypt (Caa1 negative), Ghana (B1 stable), Nigeria (Ba3 stable), South Africa (Baa1 negative) and Rwanda, which is the only debut issuer. The ratings agency expects Senegal (B1 stable) to return to international markets by the end of the year.
"The African region overall has shown considerable resilience to financial shocks during the global financial crisis, and we expect that investors' interest for the region will be sustained given the strong macroeconomic growth outlook for Africa, which we estimate to average 5%-6% over the next five years," Aurelien Mali, a Moody's Vice President and Senior Analyst, said in a statement.
Moody’s noted also that although growing, funding via international debt securities to fund infrastructure projects will likely remain a limited portion of gross capital inflows to the region, as sovereigns have other sources of external financing such as multi-/bi-lateral lending, as well as commercial loans.
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