Egypt and Ivory Coast's political crises impact African markets

Feb 02, 2011

Political troubles in Egypt and Ivory Coast have created turmoil on the Cairo and Abidjan stock exchanges in the last few weeks and the effects are now spreading to other African markets.

This week, Ghana saw the yield of its sovereign bonds go from 6.3 percent to eight per cent.

In Gabon, the figure rose from 5.3 percent to six per cent, after a week of protests in Egypt, where a million people flooded the streets of Cairo calling for President Hosni Mubarak to leave office.

The yield on Egyptian Eurobonds has risen by 120 basis points since the demonstrations started and peaked at seven per cent last Tuesday. This rate is 18.1 per cent for Ivory Coast's bonds, the Reuters news agency reports.

Major credit rating agencies - Moody's, Standard & Poor's and Fitch - have downgraded Egypt with a negative outlook, due to an increasing political risk.

It is therefore getting increasingly exposed to a reversal of foreign capital and according to several bankers, the total cash outflow of foreign capital in Egypt had reached $500 million (€361 million) per day last week, Le Nouvel Observateur newspaper reports.