Investors are eager for African sovereign debt, despite risks
Five men in dark business suits gathered before Maria Kiwanuka in a semicircle. They were international bankers and they had a pitch to make.
Ms. Kiwanuka, the finance minister of Uganda, was sitting up on a small riser, her bright pink and gold dress a sharp contrast to the men’s suits.
Bankers are jockeying for the next sovereign debt deal in Africa, a continent that foreign investors have long been wary of for its economic woes, rampant poverty and political instability. Now that narrative is changing, and one sub-Saharan nation after another is jumping into the debt market.
The Ebola outbreak, which is ravaging West Africa, could cost $33 billion, the World Bank estimated, prompting worries about the continent’s growth prospects. But the sovereign debt market is booming, with sub-Saharan African countries raising nearly $7 billion so far this year, more than in all of 2013, according to Dealogic, a market research firm.
The yields on many of the new bonds in Ghana, Kenya and Nigeria have dipped even as the Ebola crisis has intensified. That means that the market’s outlook for those countries has improved, although that could change, particularly for West African countries, if health officials’ warnings for the region turn increasingly dire.
Uganda could use the money for power plants, rail lines, roads or similar projects it has planned. Countries around the continent are generally using proceeds from the bond sales to improve infrastructure, restructure debt and finance deficits.
“They do want us, and I am flattered that they are acknowledging our macroeconomic stability, because no one wants to get in bed with a basket case,” she said. “I don’t see the sovereign bond as the end of the story. It’s just a tool to get things sorted.”
Source: NYT-Investors Are Eager for African Sovereign Debt, Despite Risks
