INTO AFRICA June Edition: Africa’s Bonds :- Coming of Age

LAGOS, Nigeria, Capital Markets in Africa: Welcome to the June edition of INTO AFRICA with focus on Fixed Income in Africa and titled Africa’s Bonds: Coming of Age Africa’s fixed income markets have benefitted from tremendous growth dynamics during the past decade, as most of Africa’s sovereign borrowers have managed to strengthen their public finances to levels above the global average. In addition, the asset class is now opening to international investors and is well supported by local institutional investors (insurance and pension funds). While still in its infancy, however, varying levels of liquidity, depth and market capacity present investors with a multifaceted set of risk and reward options that require increasingly intricate and complex analysis.

African markets growth fundamentals have not significantly improved and in most cases have deteriorated so many African countries will rely on both hard-currency debt and local-currency debt as an important source of financing their fiscal deficits. Thus, the African bonds are likely to remain volatile in the near term, but the asset class is becoming more diversified with regards to both the opportunity set and investment approaches as well as offers attractive longer-term opportunities in countries that are implementing meaningful reforms.

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