African Sovereign Eurobond September 2015 Review: Yield widening, US$449 Billion Amount Outstanding …

Lagos, Nigeria, Capital Markets in Africa — The continued low oil and commodity price environment had doubled whammy on most African countries (especially commodity dependent countries) by reducing foreign earnings and depreciation of currency. New issuance from the continent  dropped to $4.25 billion in the first nine months of 2015, with only Egypt (US$1.5 billion) Cote D’Ivoire (US$ 1 billion), Gabon (US$ 500 million) and Zambia (US$1.25 billion) coming to the market a disappointing figure relative to a of record US$8.7 billion issued in 2014. Although, Ghana launched a US$1 billion Eurobond on Wednesday 7 October 2015 at a 10.75 percent coupon rate.

The total amount outstanding of Eurobond issued by African sovereign entities was recorded at US$449 billion  at the end of September 2015. Out of which US$1.83 million and US$1.24 billion will mature in 2016 and 2017 respectively. 

The spreads on the African sovereign Eurobond continued to be widen at the end of September 2015 compared to August and January 2015 spreads.

Since January 2015 yields on Zambia’s 2022 and Zambia’s 2024 Eurobond have increased by 483 basis points (bps) and 528bps respectively. The issued in 2015, Zambia’s 2027 traded at 12.2 percent at the end of September, with yield widening of 201bps from the issue date. 

For the month of September, Ghana’s 2023, Mozambique’s 2020 and Kenya’s 2024 bond spreads have risen by 131bps (to trade at 11.1 percent), 121bps (to close at 9.9 percent) and 110bps (to end at 8.4 percent) respectively. However, Egypt’s 2020 bond spread narrowed by 21bps with yield of 4.9 percent.  

Looking at the South Africa, sovereign Eurobond maturing in 2024, 2025, 2041 and 2044 ended with a yield of 4.78%, 5.00%, 5.78% and 5.80% after increased yield of 15.5bps, 15.6bps, 28.8bps and 23.9bps respectively in the month of September.

See the table below for more on selected African sovereign Eurobonds at the end of September 2015.