Debt markets open again for sub-Saharan Africa - Fitch

By Tom Arnold
LONDON, Nov 30 (Reuters) - Ivory Coast, Ghana and Kenya may
all tap international debt markets in 2021, Fitch Ratings said,
as investor sentiment towards the region improves after the
former's recent 1 billion euros ($1.2 billion) issue.
But weaker-rated nations in sub-Saharan Africa may still
face higher funding costs than before the coronavirus pandemic,
which could discourage their return to markets, Fitch said in a
report released on Monday.
Ivory Coast's Eurobond, which was five times oversubscribed
last week, was sub-Saharan Africa's first of the pandemic era
and underlined a recovery in investor confidence in a region
that has lagged others in returning to the markets after the
shock. Ghana and Gabon both sold debt before the pandemic, but
investor aversion heightened as the virus spread around the
globe and concerns mounted about a deterioration in growth and
public finances.
"We expect other sovereigns to follow Cote d'Ivoire in
issuing Eurobonds in 2021, as market conditions have eased
sharply," Fitch said.
In a sign of improving market sentiment, the JPMorgan
Emerging Market Bond Index (EMBI) Global spread for African
issuers eased back to below 600 basis points in late November
after spiking to more than 1,000 basis points on March 23, Fitch
noted.
Namibia, Nigeria and South Africa will likely roll over
maturing bonds in 2021 when they fall due, with the trio to
conduct further issuance to meet funding needs, Fitch forecast.
Ivory Coast, Ghana and Kenya are also expected to return to
the markets in 2021, with a possibility that other issuers, such
as Benin, could join them, it predicted, given which countries
had been expected to launch issues in pre-pandemic 2020.
But sub-Saharan Africa bond issuance may remain lower than
in previous years, in part reflecting enhanced official creditor
financing, Fitch said, with the International Monetary Fund and
other official creditors continuing to provide strong support.
The G20's Debt Service Suspension Initiative (DSSI), which
can include caps on non-concessional funding, could be extended,
Fitch added.
The initiative will conserve around $9.3 billion for
Fitch-rated sovereigns in the region in 2020, with its extension
to the end of June 2021 providing further support, it said.

(Editing by Alison Williams)