Ghana and few Sub-Saharan African (SSA) nations with credit ratings of B with stable outlook that will be seeking to raise funds via the international capital market in 2021 will virtually have little problem as the market conditions have improved since the easing of the coronavirus pandemic.

According to assessment by ratings agency Fitch and JP Morgan Emerging Market Bond Index (EMBI), Cote d’Ivoire’s (B+/Positive) issuance of a 12-year €1 billion Eurobond on November 25, 2020 confirms that some SSA issuers are able to resume market issuance to meet part of their financing needs over the next year.

Cote d’Ivoire’s bond was priced at a record-low yield of 5.0 percent and was still five times oversubscribed

The report pointed out that sovereign nations including Ghana will follow Cote d’Ivoire in issuing Eurobonds in 2021, as market conditions have eased sharply.

“We expect three sovereigns [South Africa, Namibia and Nigeria] to conduct further issuance [bonds] to meet funding needs and believe Cote d’Ivoire, Ghana and Kenya will return to the markets in 2021.’

However, weaker credits may still face higher risk premia than before the coronavirus pandemic, which could discourage their return to markets.

Nevertheless, the report emphasized that investor interest in African Sovereign debt instruments is rising despite some elements of risk.

Cote d’Ivoire’s issuance was the first by an SSA sovereign since the escalation of the pandemic.

“A number of North African and Middle Eastern sub-investment-grade sovereigns have issued debt since the crisis, including Bahrain (B+/Stable), Egypt (B+/Stable) and Oman (BB-/Negative), but SSA issuers have lagged returning to markets after the shock.

“Pre-pandemic, we had expected Angola (CCC), Benin (B/Stable), Cote d’Ivoire, Gabon (CCC), Ghana (B/Stable), Kenya (B+/Negative), Nigeria (B/Stable) and South Africa (BB-/Negative) to tap international markets in 2020. However, only Gabon and Ghana managed to issue debt before the pandemic shock, in February and March, respectively, after which SSA sovereigns cancelled foreign issuance plans as markets effectively closed.”

Ghana to raise US$5 billion via Eurobonds in 2021

Ghana is seeking to raise about US$5 billion in Eurobond next year to repay debts and finance the budget.

The nation successfully raised US$3 billion in Eurobond in February this year before the coronavirus pandemic set in.

Meanwhile, the global hunt for interest rate as a result of massive monetary easing in development markets has helped bring down the cost of debt.