Regional Eurobond Yields To Rise
Although Sub-Saharan African (SSA) yields have broadly been on the decline during the first half of 2014, we remain of the view that the asset class offers little value. We expect yields across the board to rise over a one to two year time horizon with issues from Zambia and Ghana particularly at risk. We also believe that structural weaknesses in Gabon's economy and political risk in Côte d'Ivoire ahead of the 2015 election pose risk to dollar denominated debt.
Respite For Global Yields To Be Short - lived
Declines for SSA Eurobond yields have been part of a move lower for emerging market dollar denominated debt during the first six months of the year. As the chart below illustrates, yields on instruments from Lebanon to Turkey to Latin America have edged lower during the first six months of the year.
|Yield Declines On SSA Debt Not Sustainable|
|Africa - Yields On Select Eurobonds, %|