African countries struggling to access global capital markets

African countries have been facing challenges in accessing international credit markets, with various factors influencing their ability to tap into global capital. Mark Bohlund, Senior Credit Research Analyst at ISI Emerging Markets Group, highlighted the recent rally in risk market assets as a primary driver for African countries regaining market access. In a discussion on CNBC Africa, Bohlund pointed out that the dovish interpretation of the US Federal Reserve meeting and the drop in Euro bond yields for African countries like Cote d'Ivoire have facilitated successful bond issues. For example, Cote d'Ivoire recently issued a 2.6 billion Euro bond at a favorable yield of around 8.375%. However, Bohlund predicted that there might not be a large number of African countries issuing Euro bonds this year due to various uncertainties like the postponement of elections in Senegal. He mentioned the potential Euro bond issuances from Nigeria, Senegal, and Tanzania, with varying levels of market access and investor appetite. Amidst these discussions, the interview brought attention to the challenging financial conditions within emerging markets, which make it harder for countries to tap into capital. Bohlund emphasized that the increase in the US 10-year treasury yield, currently at 4.2%, has impacted global market conditions, particularly the pricing of US-denominated Eurobond issuances. While the spreads for African Euro bonds have not increased significantly compared to the past, there is a growing concern among investors about market risks, leading to limited access for countries with weaker credit profiles. Countries like Nigeria and Kenya are still striving to regain market access, with the need for sustained market reforms and a decline in overall market yields. The interview also delved into the specific cases of Benin and Senegal, highlighting the investor appetite and market dynamics surrounding their bond issuances. Benin's successful Euro bond issue amidst the election delay showcased resilience in the face of market uncertainties. On the other hand, Senegal's political environment and potential election postponement created challenges, impacting its market access and bond pricing. Bohlund noted that investors are becoming more discerning in differentiating African credits, with varying outcomes for countries based on their credit profiles and market developments. Furthermore, the discussion covered the scenario in Nigeria, where ongoing reforms and economic uncertainties have affected Eurobond deals. Despite initiatives like the NNPC loan arrangement, Nigeria still faces investor doubts due to policy clarity and FX challenges. Bohlund emphasized the need for more stability and clarity in monetary policies to attract investor confidence. In contrast, Tanzania's debut bond issuance was seen as a promising opportunity amidst a relatively uncompetitive market. With credit ratings in place and the potential for an upgrade, Tanzania is poised to enter the Eurobond market successfully, leveraging the current favorable market conditions. In conclusion, accessing global capital markets remains a key challenge for African countries, with varying degrees of success and obstacles. Market dynamics, investor appetite, and economic reforms play crucial roles in determining market access and bond issuances for African nations. As the landscape continues to evolve, countries will need to navigate these challenges strategically to leverage international capital for sustainable economic growth and development.