The US dollar is flowing again toward Africa’s sovereign borrowers.
After a muted opening to the year — with only Benin and the Republic of the Congo venturing into public markets, and Cameroon opting for a private placement later upsized — momentum has returned. Côte d’Ivoire and Kenya stepped forward last week, seizing a market still hungry for yield despite bouts of global jitters tied to fast-moving AI developments and broader volatility.
For now, investors appear willing to look through the noise.
Côte d’Ivoire Resets the Curve
Ivory Coast (Ba2/BB/BB) moved first, launching a US$1.3 billion amortising bond due February 2041, with a weighted average life of 14 years.
Initial price talk surfaced around 7.75%. Orders swelled past US$5.85 billion at peak before settling just above US$3.3 billion after pricing tightened sharply to a final yield of 7.125%.
Bankers described it as a decisive repricing of the sovereign curve, landing inside fair value by roughly 12.5 to 20 basis points. For Abidjan, it was more than a routine outing — it was a statement. Following a one-notch upgrade from Fitch Ratings in December, the country now holds full double-B ratings across the three major agencies, a status it is keen to leverage.
The ambition is clear: edge closer to the pricing territory of South Africa, whose 2041 dollar bond trades at tighter levels.
Political stability has helped. A presidential election concluded in October without major disruption. High gold prices have softened the blow from weaker cocoa revenues. More importantly, investors point to a longer-term record of fiscal management that has built credibility beyond commodity cycles.
Yet risks hover nearby.
Senegal’s Shadow
Trouble in neighboring Senegal casts a faint but notable shadow. The country faces mounting repayment pressure, including a €1 billion 2028 bond beginning amortisation soon and heavier obligations in mid-year.
Talks with the International Monetary Fund are ongoing after the discovery of previously undisclosed debt derailed an earlier programme. A renewed IMF arrangement would unlock broader financing channels, but uncertainty persists.
Within the West African Economic and Monetary Union, financial linkages run deep. Banking sector exposure and shared monetary infrastructure mean turbulence in Dakar could ripple outward — even if only indirectly — to Abidjan.
For now, investors appear comfortable compartmentalising the risk.
Kenya’s Refinancing Machine Rolls On
Further east, Kenya returned to the dollar market for the fourth time since early 2024, reinforcing a strategy that has transformed its funding profile.
Back in February 2024, a $1.5 billion issuance combined with a tender offer helped neutralise a looming $2 billion maturity. That transaction marked a turning point. Since then, Nairobi has repeatedly paired new issuance with liability management, smoothing its repayment schedule and gradually lowering average borrowing costs.
This time, Kenya priced:
US$900 million due February 2034 (weighted average life: 7 years) at 8.1%
US$1.35 billion due February 2039 (weighted average life: 12 years) at 8.95%
Both tranches offered double-digit new-issue concessions over the curve — notable for a B/B– rated credit — yet still tightened from initial guidance.
Part of the proceeds will fund buybacks of 2028 and 2032 bonds, continuing the methodical extension of maturities. Refinancing needs in foreign currency remain manageable for the rest of the decade before rising more sharply post-2030.
Dollar funding has grown increasingly central for Kenya. Domestic rates, while easing, remain comparatively elevated. Meanwhile, the country can point to improving external accounts: a narrowing current account deficit over five years and foreign exchange reserves climbing to a record US$12.4 billion in December.
Growth remains solid. Inflation is contained.
The weak spot lies in fiscal execution. Revenue shortfalls have complicated consolidation plans, and while the government’s medium-term framework leans on spending restraint rather than aggressive tax hikes, delivery risks remain.
A Reopening, Not a Free Pass
Taken together, the deals signal a reopening — not a blank cheque.
Investors are selective but engaged. Credits with credible policy frameworks and liability-management strategies are finding room to manoeuvre. Those with governance or fiscal clouds overhead may discover the window narrows quickly.
For now, though, Africa’s sovereign pipeline is stirring — and the dollar door is unmistakably ajar.
