Browsing: RMB

African Risk

African risk is not fairly priced, governments should take advantage

Opinion

Yield-chasing investors have poured money into Africa, but an emerging, recent challenge for the continent is that in a now higher interest rate environment, investors don’t need to come to Africa to find higher returns.

Even US treasuries are now yielding far more attractive yields than just a month ago: three-month government bonds offer 5.32 per cent, while 2-year bonds offer a yield above five per cent. Yields have risen in part in response to Fitch’s recent downgrade of the US from AAA to AA+, echoing S&P’s move in 2011.
African bond issuers, spooked by the high-interest rate environment and refusing to issue bonds above the psychological barrier of double-digit yields for Sub-Saharan African bonds, continue to wait it out on the sidelines.…