The Republic of Ghana recently made a debut $750m (£366m) sovereign bond issue. The 10-year bond issue, which was listed on the London Stock Exchange and sold into both the US and European markets, was hugely oversubscribed and reflects international investors’ interest in and appetite for the rapidly growing African capital markets.
This growing investor interest is driven by several factors which can be grouped into two categories. Firstly, the improved picture of Africa – stable economies underpinned by regulatory change, structural reforms, higher growth rates, lower inflation, foreign debt relief, stable exchange rates, increased foreign reserves and the general economic revival of many African countries. Secondly, global liquidity conditions (which have driven down returns in certain – benign – markets), increasing demand and higher commodity prices (as illustrated by Sino-Africa trade flows), have meant higher returns on investments and lower capital costs in Africa.
