The newly released 2016 edition of the International Debt Statistics (IDS) shows a rapid rise in sovereign bond issuance in some Sub-Saharan African countries. This includes those countries that have benefited from Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI) debt relief programs.
The chart above shows that sovereign bond issuance in certain Sub-Saharan African countries has risen substantially over the past 4 years. At the end of 2011, bond issuance totaled $1 billion and by the end of 2014, it amounted to $6.2 billion. Steady global market conditions and the potential for higher returns for investors have helped pave the way for more access to international markets, where the average return for these bond issuances is about 6.6%, with an average maturity of 10 years.
For these Sub-Saharan African countries, the proceeds from these sovereign bonds are used to benchmark for future government and corporate bond markets issues, to manage the public debt portfolio, and for infrastructure financing.
Rapid rise in bond issuance and more Sub-Saharan African countries accessing international capital markets
Between 2013 and 2014, a total of 11 countries accessed the bond markets. In 2013, the largest sovereign bond issuance shares were made by Gabon ($1.5 billion), Ghana ($1 billion), and Mozambique ($0.9 billion). In 2014, the largest issuances were made by Kenya ($2 billion), Ethiopia, Ghana, and Zambia – all three at $1 billion each.
In the chart below, the issuance of sovereign bonds as a percentage of gross national income (GNI) was moderately low, below 5% for most of these countries, with the exception of Gabon where it represented 10%.
Changes in borrowing patterns and creditor compositions
The chart below shows the percentage breakdown of total public and publicly guaranteed (PPG) debt by creditor for those Sub-Saharan African countries that have recently issued bonds in the international capital markets. In 2010, only Gabon, Ghana, and Senegal had issued bonds prior to this, but by the end of 2014, all countries in the chart had issued sovereign bonds. So in the case for some of these countries, this bond issuance boom during 2014 represented a significant change in their borrowing patterns and creditor compositions.
For more analysis and trends on debt statistics, take a look at the just released 2016 International Debt Statistics (IDS) http://data.worldbank.org/products/ids or the access the IDS database in our Data Catalog http://data.worldbank.org/data-catalog/international-debt-statistics.
The 2016 IDS presents data and analysis on the external debt for 120 low- and middle-income countries during 2014, based on actual financial flows and debt-related transactions reported to the World Bank Debtor Reporting System. The IDS also features quarterly external and public sector debt statistics for high-income countries, which all can be accessed on the Debt Data Portal.
Indicators and codes used in this post:
- PPG, bilateral (DOD, US$) (DT.DOD.BLAT.CD)
- PPG, bonds (DOD, US$) (DT.DOD.PBND.CD)
- PPG, commercial banks (DOD, US$) (DT.DOD.PCBK.CD)
- PPG, multilateral (DOD, US$) (DT.DOD.MLAT.CD)
- PPG, other private creditors (DOD, US$) (DT.DOD.PROP.CD)
- Gross National Income (current US$) (NY.GNP.MKTP.CD)
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