Window slams shut on African sovereigns
A reopening of access to funding in 2024 has revealed itself as having provided no more than temporary respite for beleaguered governments
After a US$13bn rebound in African Eurobond issuance in 2024, the window has again swung shut. Market access remained open through the first quarter of 2025, with sovereigns from Benin, Egypt, Ivory Coast, Kenya and Nigeria all issuing sizeable deals. However, appetite has since evaporated, as political uncertainty, rising US yields and a global selloff in risk assets have reversed investor sentiment.
Issuance came at a price. Benin was the first African sovereign to tap international markets in 2025, issuing a US$500m 16-year bond on January 23 with a coupon of 8.375% and a yield of 8.625%. Egypt followed five days later, issuing a US$2bn dual-tranche bond, split between a five-year tranche yielding 8.625% and an eight-year at 9.45%. Kenya came next on February 27, raising US$1.5bn through an 11-year bond due in 2036 with a 9.5% coupon and 9.95% yield.
Ivory Coast issued a CFA Fr220bn (US$350m) three-year bond on March 26, marking the first CFA franc-denominated bond in the international market, with a coupon of 6.875% and yield of 7.625%. Nigeria completed the activity on April 11, raising US$2.2bn across two tranches: a 6.5-year yielding 9.625% and a 10-year at 10.375%.
Multilateral financial institution Africa Finance Corporation also issued a US$500m hybrid bond in January 2025. This perpetual non-call 5.25-year bond was priced with a 7.50% coupon and 7.625% yield and marked AFC’s inaugural issuance in the asset class.
“I just don't see anybody wanting to allocate [at the moment],” said Charlie Robertson, head of macro-strategy at FIM Partners, the Dubai and London-based specialist investment manager. "You've got a massive selloff in US high-yield. The sort of investors who buy US high-yield are the same sort of investors who could allocate to African frontier credits. They look at much higher yields in the US and say: 'Should I be buying a low Single B rated credit in Africa?'."
Churchill Ogutu, an economist at IC Group, the Accra-headquartered financial services company, said: “The situation is quite volatile and it's quite difficult. I don't think an issuer can come into the market in the near future — by near future, in the next one, two or three months — because the Eurobond yields have really spiked and are disincentivising our potential issuers coming to the market.”
Africa's access to international capital markets was effectively shut throughout 2023, and it cautiously reopened in early 2024. After the Covid-19 pandemic, many African economies struggled with rising debt burdens, weak growth and deteriorating credit ratings. These vulnerabilities, combined with high US interest rates, a strong dollar and global risk aversion, locked most sovereigns out of external financing. A temporary fall in US Treasury yields in late 2023 and early 2024, improving risk appetite and stronger multilateral support — particularly from the IMF — triggered a reopening.
Ivory Coast led the way with a US$2.6bn dual-tranche deal in January 2024, followed by Benin’s US$750m bond and Kenya’s US$1.5bn refinancing issue in February. Morocco tapped the market in March with a €2bn dual-tranche issue, while Egypt returned in April with a US$2bn two-part deal, including a €1.25bn tranche.
Issuance continued mid-year. Senegal raised US$750m in June, Cameroon placed a US$550m seven-year bond in July, Nigeria returned in August with a US$500m issue and South Africa issued two international bonds in November totalling US$3.5bn.
Quasi-sovereign issuers also tapped the market. The African Development Bank issued a US$750m hybrid bond in January 2024, the first of its kind by a multilateral development bank. BADEA, the Arab Bank for Economic Development in Africa, launched a €500m debut social bond in January. The AFC placed a US$500m bond in October, while South Africa’s Transnet raised R5bn (US$270m) in March 2024 through its first rand-denominated international bond, priced at a 9.5% yield.
Issuance remained concentrated among borrowers with relatively strong macro fundamentals, credible monetary frameworks or close multilateral ties. Deals were heavily oversubscribed, reflecting pent-up demand, but came at a price: coupons ranged from 5.55% to over 10%. Most proceeds were used to refinance maturing liabilities or shore up reserves rather than finance new investments.
By mid-2024, conditions deteriorated as US Treasury yields rose amid hawkish Federal Reserve guidance. However, some African sovereigns could still tap the markets before volatility intensified. In early 2025, rising trade tensions under President Donald Trump triggered a sharp selloff in risk assets. Funding costs surged, deal pipelines stalled, and by April, the issuance window had effectively closed again.
The brief reopening from January to March was highly selective, reflecting temporary improvements in global conditions rather than a fundamental strengthening of African credit profiles. For most sovereigns, market access remains precarious, highly sensitive to shifts in external sentiment.
"For the Sub-Saharan African region, it definitely seems that things are a bit more difficult," said Thea Fourie, head of Middle East and Africa at S&P Global Market Intelligence. "If these sovereigns wanted to issue, they would have to pay very high yields, and probably the yields are just too high — they would put them off issuing."
In addition, she said, credit default swap spreads have widened significantly in several countries since the start of April 2025.
"Angola, Senegal, Kenya, and Rwanda have seen the CDS spreads widen quite a lot, reflecting some of those sovereign risk concerns. It has become an issue for many African sovereigns, and they won't be able to issue for the next few months."
Some analysts argue that African fundamentals do not justify the renewed market freeze. While external conditions have tightened, several African sovereigns maintain relatively stable macroeconomic frameworks, and many are better positioned than during previous crises.
“I would argue that a lot of them, a lot of the credits in Africa, are better value now that you've got US recession risk that could blow up US companies," said Robertson.
Some African leaders share Robertson's view. To challenge what they see as entrenched bias among global credit ratings agencies, the African Union launched the African Credit Rating Agency in February 2025, aiming to be fully operational by June.
At the launch in Addis Ababa, Kenyan president William Ruto said: "It is time for Africa to use the right scale, one that reflects its true weight. The Africa Credit Rating Agency will do just that." Ruto criticised global agencies for relying on outdated assumptions and systemic bias, adding: “Global credit rating agencies have not only dealt us a bad hand, they have also deliberately failed Africa.”
However, Robertson believes US actions could benefit Africa during the next few months. "[Recessionary risks] mean you probably do see Fed cuts, that's probably helpful for Africa; you probably do see a weaker dollar, that's helpful for Africa. And for the oil importers, like Kenya, Egypt, Morocco, Namibia, South Africa and Zambia, a whole load of credits, they are going to benefit from low oil too."
Despite these supportive trends, market access remains out of reach for most issuers. Investors have become increasingly sensitive to global volatility, often applying a broad risk premium to the continent.
“For all these reasons, I think the market shouldn't be closing off," said Robertson. "I think what you've got is just a big spike in risk aversion. That means it would be surprising to see a country try to issue a Eurobond into this market.”
Ogutu offered a similar assessment, noting how abruptly investor sentiment has shifted. "The sort of sentiment shift we've seen since March has just wiped away the appetite," he said. "One week, there was talk of reopening, and the next, everything was off the table. It's extremely reactive now — not necessarily rational."
While some sovereigns have made policy progress or secured IMF support, many still grapple with weak fiscal positions, widening deficits and rising debt burdens. This has created a funding environment where even better-rated countries are priced out of international markets.
High service costs
Angola, for instance, is stress-testing its budget assumptions as oil prices fall, with an IMF loan programme becoming more likely. Its total debt service is projected at US$13.6bn in 2025, with 69% attributed to external debt and 31% to domestic debt. Debt service is expected to consume 67% of total fiscal revenues.
Having defaulted on its Eurobond in late 2023, Ethiopia is restructuring US$8.4bn of debt under IMF guidance. Despite securing a US$3bn IMF programme, Ghana has faced fiscal slippages and delays in reforms, requiring fresh IMF reviews.
Kenya is contending with heavy debt service costs that consume more than half of its projected revenues. Although reaching a restructuring agreement, Zambia is still finalising deals with creditors. These countries remain in a holding pattern — unable to issue yet facing a wall of repayments and few alternative funding options.
Moreover, Africa faces intensifying debt service pressures as refinancing options vanish. According to the African Development Bank, the continent’s total external public debt exceeded US$1.15trn by the end of 2023, more than double the level recorded in 2010.
By June 2023, the outstanding stock of African sovereign Eurobonds was estimated at US$143bn in face value, according to the African Export-Import Bank, the pan-African multilateral financial institution. As of April 2025, Sub-Saharan Africa's median public debt-to-GDP ratio remains below 60%, according to the IMF.
African sovereigns face a significant wall of Eurobond repayments, with around US$10.2bn in maturities due in 2025 alone. The most considerable obligations are held by Egypt (US$3bn), South Africa (US$2bn), Angola (US$864m), Tunisia (US$1bn), Namibia (US$750m), Gabon (US$700m) and Nigeria (US$500m).
Moreover, a deteriorating global environment has set back Sub-Saharan Africa's fragile post-Covid recovery. Higher borrowing costs, tighter external financing, weaker global demand, falling commodity prices and heightened uncertainty have clouded the short-term prospects.
"Today, that fragile recovery faces a new test: a surge of global policy uncertainty so profound it is reshaping the region’s growth trajectory," said Abebe Selassie, the director of the IMF’s African Department, at the 2025 Spring Meetings.
The IMF's April 2025 World Economic Outlook projects that Sub-Saharan African growth will slow to 3.9% this year, down from 4% in 2024, as tighter global conditions and trade tensions weigh on the region.
Despite restructuring agreements, Ghana and Zambia remain in default due to unresolved disputes over the treatment of loans from regional lenders such as Afreximbank and the Trade and Development Bank, the financial arm of the Common Market for Eastern and Southern Africa. These so-called "baby multilaterals" fall outside standard creditor categories, complicating negotiations and delaying final deals.
The IMF has warned of prolonged distress if restructurings continue to stall. At the Spring Meetings in April 2025, it launched a new sovereign debt “playbook” under the Global Sovereign Debt Roundtable, aimed at improving coordination and accelerating outcomes for countries in default.
According to the IMF, as of April 2025, nine African countries — including Ethiopia, Ghana and Zimbabwe — are in debt distress, with an additional 26 at high risk.
With elevated borrowing costs and limited market access, many governments remain stuck between mounting repayments and constrained liquidity.
"It's not just about global rates," said Fourie. "For many of these economies, even if markets were open, the fiscal metrics are not supportive. They've been hit on all sides — revenue, foreign exchange reserves, inflation. The cost of accessing is one thing; the fundamentals are another. I think that's something investors are definitely looking at now — not just can they borrow, but should they be borrowing in the first place?"
Oil dependency
African sovereign bond yields have risen sharply in 2025, reflecting heightened investor risk aversion and challenging global financial conditions. Angola’s dollar-denominated bonds reached 15% in April, up from around 9.5% earlier in the year. The spike was triggered by falling oil prices and broader market turmoil, culminating in a US$200m margin call on a JP Morgan-backed loan secured against Angola’s sovereign bonds.
Gabon, another oil-dependent borrower, also saw its bond yields rise to 15% amid mounting concerns over political stability and fiscal pressures.
Nigeria's Eurobond yields followed a similar pattern. Average yields climbed to 11.21% on April 9, up from 9.58% at the end of March, after sweeping US tariffs triggered heavy selloffs across frontier markets. The short end of the curve was particularly affected, with the yield on Nigeria's November 2025 bond jumping by 282bp over the same period. As of April 22, Nigeria's sovereign yields stood at 10.60%, reflecting continued investor nervousness over fiscal reforms, revenue weakness, and currency volatility.
The broader outlook for frontier market access remains bleak until global financial conditions ease. “I would say if we do get a Fed cut, then that’s the point at which people start looking again at frontier markets," says Robertson. "I think we need that signal first, and then the market can reopen — probably late 2025.”
However, even if external conditions eventually ease, several African sovereigns remain weighed down by unresolved debt restructurings and fragile fiscal positions, limiting their ability to seize any market reopening. Ethiopia, Ghana and Zambia illustrate African sovereigns' hurdles in navigating complex restructurings under the G20 Common Framework.
In March 2025, Ethiopia secured an agreement in principle with its Official Creditor Committee to restructure US$8.4bn of debt, aligned with its US$3.4bn four-year IMF programme. The deal offers around US$2.5bn in debt service relief through 2028, mainly by extending maturities rather than reducing principal. However, private creditor negotiations remain fraught.
Bondholders of Ethiopia's US$1bn Eurobond have rejected a proposed 18% haircut, arguing the country's recent reforms, including a floating exchange rate and stronger gold and coffee exports, have stabilised finances and do not justify profound restructuring. The IMF disagrees, warning that external debt service will absorb more than 24% of exports in 2025 without significant relief, well above sustainability thresholds.
Ghana formalised its official creditor restructuring in January 2025, securing US$2.8bn in relief to support its IMF programme. The government is now negotiating bilateral agreements to implement the deal. However, progress with commercial creditors remains slow. Ghana owes Afreximbank around US$750m — nearly a quarter of its commercial debt — and disputes over whether "baby multilaterals" like Afreximbank and TDB should be restructured complicate the process.
Zambia, which defaulted in 2020, has also made headway. In mid-2024, it agreed on a restructuring with bilateral creditors and struck a deal with a bondholder committee in March 2025 to swap US$3bn of Eurobonds into two new amortising instruments.
Whether the window for African issuance reopens will depend on global conditions and the credibility of African policy responses. Even the best-rated sovereigns find it challenging to secure market access, while weaker credits face mounting repayments and limited alternatives. For now, sentiment remains fragile and yields elevated.