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

Michael Olabisi · Howard Stein

110 citations0/0 files storedJournal of African Trade

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Credit Risk and Financial Regulations Global Financial Crisis and Policies Fiscal Policies and Political Economy

Abstract

There is a new wave of external borrowing by African governments on private sovereign bond markets.The findings in this paper indicate that African economies pay higher-than-normal coupon rates on these markets; observed risk measures like agency ratings and debt to GDP ratios do not explain the deviation from the norm.We also find that countries in better financial standing tend to self-select into the private markets, such that their risk profiles cannot explain the high coupon rates.Further research steps and policy implications are discussed.

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References

2012The European Sovereign Debt Crisis 2004Information costs and home bias: an analysis of US holdings of foreign equities 2004Ending Africa's Poverty Trap 2010Determinants of Sovereign Risk: Macroeconomic Fundamentals and the Pricing of Sovereign Debt 1996A self-fulfilling model of Mexico's 1994–1995 debt crisis 2007Sovereign debt crises and credit to the private sector 2000Our continent, our future: African perspectives on structural adjustment 2005Sovereign credit ratings: Guilty beyond reasonable doubt?

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2016Sovereign bonds in developing countries: Drivers of issuance and spreads 2022The color of money at the financial frontier 2018Sub-Saharan African Eurobond yields: What really matters beyond global factors?2018Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa 2019Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa 2021

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