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An analysis shared by the Access Bank group has indicated that for the first time since 2015, no African country has a sovereign risk premium in distress territory, with Mozambique’s bond yield spread over US Treasuries falling below 1000bp, per JPMorgan Chase & Co. data.
According to the analysis, this milestone followed a decade of debt distress triggered by cheap borrowing and fiscal expansion, worsened by the coronavirus pandemic, when Zambia, Ghana, Malawi, and Ethiopia defaulted.
Since then, inflation had reportedly moderated, Zambia and Ghana had restructured their debt with bilateral creditors and bondholders, and other countries, including Kenya, have regained access to capital markets.
“The International Monetary Fund (IMF) has approved several rescue packages, which in turn have sparked reform stories,” the analysts stated.
It, however, indicated that the continent-wide exit from distressed territory did not mean the debt crisis was over.
Ethiopia, which defaulted on its sole Eurobond in 2023, had made little progress with bondholders to restructure it.
“While national-level risk premiums have improved, some individual bonds continue to trade at distressed premiums. For instance, Senegal’s March 2028 note trades at distressed levels due to high debt (119 percent of GDP) and fiscal issues.
“Of the 303 African sovereign dollar bonds tracked by Bloomberg, only six are currently trading at distressed levels,” it stated.
Overall, as economic distress in Africa subsides and high-yield sovereign bonds outperform investment-grade bonds in emerging markets, African debt may appeal to investors seeking protection from global uncertainties.
On the global front, China’s export growth accelerated in June for the first time since March, rising 5.8 percent year-over-year to $325 billion, exceeding expectations, thanks to reduced US tariffs and strong overseas demand.
Imports grew modestly by 1.1 percent, generating a trade surplus of US$115 billion.
“While robust exports have supported China’s economy amid weak domestic demand, this boost may wane in the second half of 2025 as the US ramps up new tariffs under the Trump administration.
“Recent measures include a 50 percent copper tariff and steep duties on Vietnamese exports, aimed at curbing transshipped Chinese goods. These shifts signal rising trade tensions that could dampen future export momentum,” the analysts said.
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