(Bloomberg) -- The Federal Reserve’s half-percentage-point interest-rate cut may pave the way for new debt issuance by African nations including Nigeria and Angola, according to BancTrust & Co.
This bigger than expected easing in US monetary policy will “likely drive market yields lower in the sub-Saharan Africa space, which would increase the attractiveness of the international capital market for issuers,” the London-based investment bank said in a research note on Wednesday.
Nigeria is expected to offer a eurobond soon after the Fed’s decision, it said.
A similar sale by Angola is likely if yields at the mid- to long-end of its curve move closer to 9%, which is not too far from where most of the nation’s eurobonds were priced at issuance, the bank said. Angola may also issue a debt-for-nature swap, it said.
Kenya is unlikely to go to the international bond market in the near term because of “its own idiosyncratic risk” including high debt-servicing costs and foreign reserves being under pressure, BancTrust said. As a result, Kenya is likely “to rely on concessional financing until investor sentiment toward the Ruto administration improves,” it said.
A successful eurobond offering by Nigeria may lead financial institutions and companies such as Access Bank Plc, FBN Holdings Plc and SEPLAT Energy Plc to access debt international markets, BancTrust said.
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