Nigeria, other sub-Saharan African countries raise over $17bn from bonds – World Bank

Motolani Oseni

The World Bank has said Nigeria, Kenya, Côte d’Ivoire and other sub-Saharan African countries have raised over $17 billion from bond issuances in 2018.

In a report, titled ‘Africa’s Pulse,’ produced by the Office of the Chief Economist for the African Region at the World Bank and released during a recent joint Spring Meetings with the International Monetary Fund in the US, the bank revealed that over $17billion had been raised from bonds by sub-Saharan African countries while warning of increasing debt vulnerabilities.

The World Bank said, “In sub-Saharan Africa, 2018 marked a record year for international bond issuances.

Between 2013 and 2017, countries in the region (excluding upper-middle-income countries) issued, on average, a total of $4.5billion per year, with an average issuance size of $1billion.

In 2018, bond issuances totalled more than $17billion, with the average issuance rising to nearly $3billion.

“In addition to the increase in issuance volumes, several countries (Côte d’Ivoire, Kenya, Nigeria) was able to extend maturities to 30 years.”

While mentioning Bloomberg’s emerging-market local-currency government bonds index, which covered major emerging markets such as Nigeria, South Africa and Argentina, he stated that Nigeria’s bond continued to top the chart due to the stability of the Investors’ & Exporters’ FX Window rate and the yields being high by emerging-market standards.

In spite of this development, the World Bank had warned sub-Saharan African countries of increasing debt levels and its attendant vulnerabilities.

“As of end-2018, nearly half of the countries in sub-Saharan African covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013.

In addition, safety margins have decreased in several countries rated as at moderate risk of debt distress,” it stated in Africa’s Pulse report.

This was re-echoed by the Financial Counsellor and Director, Monetary and Capital Markets Department, IMF, Tobias Adrian, while presenting the Global Financial Stability Report at the spring meetings.

“Nigeria has been borrowing in international markets but we worry. So, on the one hand, that is very good because it allows Nigeria to invest more; but on the other hand, we do worry about rollover risks going forward”, he said.