African sovereigns turn to banks as bond yields soar
With yields on many African dollar bonds having reached ‘distressed’ levels, governments on the continent are turning to banks for funding
African nations are turning to banks to raise dollar funding as soaring inflation and worsening global risk appetite push up the cost of borrowing in hard currency to prohibitive levels.
Yields on the dollar-denominated debt of several African countries including Kenya, Nigeria and Egypt have reached distressed levels, a threshold at which the yield spread of the securities begins to approach or exceed 1,000 basis points (10 percentage points) over 10-year US treasuries. That level is regarded as an indicator that countries may struggle to repay debt should they issue dollar bonds at yields exceeding that 1,000 basis point spread...
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