Sovereign bond issues: Do African countries pay more to borrow?☆

Olabisi, Michael; Stein, Howard

doi:10.1016/j.joat.2015.08.003

Cited by 51 publications

(33 citation statements)

References 11 publications

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“…Many SSA governments, including in several ex‐HIPCs, now have access to a wider range of lenders and debt instruments (Prizzon & Mustapha, ). In the academic and policy literature, most attention has gone to the large US dollar‐denominated bonds that SSA governments have issued in international markets in recent years (see, e.g., Gevorkyan & Kvangraven, ; Mecagni et al., ; Olabisi & Stein, ; Presbitero, Ghura, Adedeji, & Njie, ; Sy, ; UNCTAD, ). That notwithstanding, it is important to highlight that in SSA marketable public debt is now increasingly issued in local currency to private domestic investors, a trend that follows emerging economies in other regions, be it with a considerable lag (Didier & Schmukler, ).…”

Section: Introductionmentioning

confidence: 99%

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

2018

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This paper analyses the development of local currency sovereign bond markets (LCBMs) in sub‐Saharan Africa (SSA), a potentially important source of longer‐term public finance. We make two contributions to the literature. First, we build a novel data set comprising 28 SSA countries for the period 2000–14 to uncover the main correlates of LCBM capitalisation, of local currency bond (LCB) tenors and of LCB issue yields. We find that LCBM capitalisation in SSA relates to politico‐institutional factors, overall financial development and financial system structure. For LCB tenors and issue yields, inflation levels matter too. Second, we complement our econometric analysis with qualitative case studies of Kenya and Nigeria, where we further investigate the drivers of LCBM development and place LCBMs in a broader public debt context. While we document the increasing importance of LCBMs in SSA, we also highlight new vulnerabilities, including those related to investor base composition.

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Section: Introductionmentioning

confidence: 99%

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

2018

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“…Investors may also have systematic bias against particular markets. As reported by Olabisi and Stein () and Presbitero et al. (), African countries pay higher interest rates than could be warranted by their fundamentals at all times, reflecting the general ‘distrust’ of African governments as debtors.…”

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confidence: 83%

“…This is more than a third of the size of the bond markets, indicating a substantial participation of foreign asset managers in African bond markets. The oversubscription by foreign investors of many bond issuances is a clear demonstration of high demand of the asset class by return‐seeking investors (Olabisi and Stein, ).…”

Section: Private Actors and Emerging Financial Integration In Sub‐sahmentioning

confidence: 99%

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Bonizzi¹,

Laskaridis²,

Toporowski³

2019

Development and Change

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This article analyses the effect of changes in international financial markets on the debt dynamics in sub-Saharan Africa in recent years. A key development is the rise of the private sector as both a lender and a borrower in African debt markets, a process that is associated with the growing integration of the region into global financial markets. The article argues that the Debt Sustainability Framework of the International Monetary Fund and World Bank has taken some steps to account for this growth of private sector, crossborder debt, but such steps still fall short of what is needed. A full appreciation of the importance of private debt implies, first, that debt sustainability in sub-Saharan Africa be understood in the context of countries' integration in global financial markets and the global liquidity cycles that characterize those markets and, second, that the interplay between private and public debt be monitored in order to provide a fuller picture of the impact of private sector debt on fiscal sustainability.The authors wish to thank the anonymous reviewers for their helpful feedback and Andreas Antoniades, Stephanie Blankenburg, Penelope Hawkins and Ewa Karwowski for comments on an earlier version. We also thank UNCTAD for financing earlier research on this subject. All errors are the authors' own.

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“…The spreads on LIE sovereign debt are highly correlated with the global risk appetite (Box Figure panels 1 and 2). Initially LIE bonds, particularly in sub-Saharan Africa were trading at a discount compared to similarly rated emerging market economies prompting some analysts to speak of an "African premium" (Olabisi and Stein 2015). Continued global search for yield in the context of accommodative monetary policy in advanced economies has pushed evaluations up particularly for lower rated issuers (Box Figure Panel 3).…”

Section: B Outlook For the Structure Of Debtmentioning

confidence: 99%

The Evolution of Public Debt Vulnerabilities In Lower Income Economies

2020

Policy Papers

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Sovereign bond issues: Do African countries pay more to borrow?☆

Cited by 51 publications

References 11 publications

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

The Evolution of Public Debt Vulnerabilities In Lower Income Economies

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