Ivory Coast bond default 'to put Africa's outlook at risk'

Jan 11, 2011

Credit rating agencies could lower their outlook for Africa if Ivory Coast defaults on an interest payment on its intentional bond, analysts have warned.

Business Daily reports Ivory Coast did not provide a coupon payment of nearly $30 million (€23.2 million) on Friday (January 7th), as government factions argued over who should pay the overdue interest.

Some experts have suggested this could result in the risk premium of Kenya's forthcoming $500 million Eurobond being raised, with Humphrey Mwangi, Senior Underwriter at the African Trade Insurance Agency, quoted by the news source as saying: "African countries proposing to float international bonds will have to undergo a lot more scrutiny than before."

He added that a number of investors "view Africa as one basket of risk" meaning the Ivory Coast situation could damage the reputation of other nations.

Kenya recently had its sovereign credit rating upgraded by Standard & Poor's, which gave the country a B+ score with a stable outlook.