African Sovereign Eurobond February 2016: Spreads Narrrowing amidst unchanged Fed Rate

Lagos, Nigeria, Capital Markets in Africa — African sovereign Eurobonds spreads narrowing in February compared to January spreads. This is as a result of the US Federal Reserve signalled that the Fed has put future rate hikes on hold but will continue to monitor closely developments in the global economy and financial markets. In addition, crude-oil price recovery on hopes that key oil producers aimed at freezing or cutting current levels of production and couple with the positive outlook from China economy.

In the month of February, US$140 million was due interest payment by Angola (Us$61.25 million) and Ghana (US$78.75 million). The total amount outstanding of Eurobond issued by African sovereign entities was recorded at US$46.90 billion at the end of February 2016. Out of which US$1.8 billion and US$1.2 billion will mature in 2016 and 2017 respectively.

The spreads on the African sovereign Eurobond narrowed at the end of February 2015 compared to January’s yield, with exception of Congo’s 2029 (1 month spread of ++22.3 basis points), Ghana’s 2030 (1 month spread of +38.8 basis points), Mozambique’s 2020 (1 month spread of +158.4 basis points) and Nigeria’s 2021 (widening by 5.4 basis points at 8.10 percent). Also, Nigeria’s 2023 and Tunisia’s 2027 spread widened by 3.2 basis points and 3.6 basis points respectively. The table below shows the yield to maturity and spread movements for some selected African sovereign Eurobond at the end of February 2016.