$14 Billion Order Book Shows Investors Still Crave African Bonds

The timing could scarcely have been worse.

When Kenya started a series of meetings with some of the world’s biggest bond investors in the U.S. and London last week, it was in the midst of a political crisis. On the day the roadshow started, Moody’s Investors Service downgraded the nation’s credit, and then the International Monetary Fund divulged that the government had lost access to an emergency $1.5 billion facility after missing fiscal targets.

Never mind: investors placed $14 billion of orders when Kenya came to the market on Wednesday, allowing it to issue $2 billion of 10- and 30-year securities at 7.25 percent and 8.25 percent, respectively.

Kenya continued Africa’s blazing start to the year in the Eurobond market. Egypt and Nigeria each attracted $12 billion of orders when they sold $6.5 billion of debt between them last week. Even with benchmark U.S. Treasury yields heading for 3 percent as the Federal Reserve continues along its policy-tightening path, African dollar debt — which offers some of the highest sovereign yields globally — still has plenty of buyers.

There could be more to come from the continent. Ivory Coast is said to have chosen BNP Paribas SA, Citigroup Inc., Deutsche Bank AG and Societe Generale SA to manage a sale of euro-denominated debt. On Tuesday, Ghana’s finance minister said he may double his target for an upcoming deal to $2 billion. And South Africa said it plans to raise as much as $3 billion in each of the next three fiscal years.