African countries will pay more to issue eurobonds, says S&P

May 30, 2014

US rating agency Standard & Poor's (S&P) said that the financial costs associated with the issuance of eurobonds will now be greater for African countries.

US rating agency Standard & Poor's (S&P) said that the financial costs associated with the issuance of eurobonds will now be greater for African countries.

It cites as an example the deficits of Ghana, West Africa’s second-biggest economy, and Zambia, the continent’s number two copper producer, which led to creditworthiness downgrades.

Reductions in the Fed’s monetary stimulus that injected cheaper cash into developing-nation assets is also changing the conditions of issuance for countries with struggling economies, said S&P.

“The heydays of bond offerings from newcomers or from frontier markets, like the African issuers we have seen over the last couple of years
have ended", Konrad Reuss, said Head of S&P’s sub-Saharan Africa unit, quoted by the newspaper Business Daily.

Periods of “oversubscribed bond offerings and very narrow, very tight spreads are over,” he added.

Previously presented as an effective means of mobilising funds, eurobonds could now become less and less popular among African governments.ADNFCR-2976-ID-801724265-ADNFCR