ANALYSIS: Africa is wall-to-wall junk ratings, but you wouldn’t know it from bond markets
African Eurobonds are outperforming wider emerging markets’ in a rally driven by external factors — making it tricky to call the end
Lagos/Nairobi — Every African nation that sold dollar debt now has at least one junk grade, but it would be hard to tell by looking at the bond market. The average yield on sovereign Eurobonds in Africa has hovered near the lowest level in two years this month, according to a Standard Bank index, even after Moody’s Investors Service cut Namibia to below investment grade on August 11. The world’s biggest producer of marine diamonds had been the continent’s only dollar-bond issuer without a junk rating. A low interest rate environment in the developed world has been encouraging investors to look past the problems plaguing African economies, including low commodity prices, dollar shortages in some of them and rising political tension in others. "The dynamics around African Eurobonds are mostly driven by external rather than domestic factors," said Ronak Gopaldas, a Johannesburg-based Africa strategist at FirstRand’s Rand Merchant Bank. "Since late 2014, the continent’s economic fortune...
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