Some 32 sovereigns have made their bond market debuts since the 2008 global financial crisis. Some 13 of them will face their first maturities between 2019 and 2025.
These sovereigns will be under particular scrutiny as their maturities approach because the cost of refinancing debt is increasing. Stefan Weiler, head of CEEMEA DCM at JP Morgan, told GlobalCapital: “For the past few years, it’s been cheaper to issue new debt. Borrowers have been able to refinance at cheaper rates. That’s changed for the first time this decade for EM high grade corporates this year, and it’ll likely change for sovereigns and high yield borrowers next year too.”
Kenya’s debut bond — a $500m five year issued in June 2014 — falls due next year. The bond was priced to yield 5.875%. It added a further $250m to the tranche in November of the same year.
Kenya returned to the market this year, raising $1bn at 10 years and another at 20 years in February. Moody’s downgraded the sovereign from B1 to B2 just as the sovereign’s roadshow was announced. The 10 year tranche of its February deal was priced to yield 7.25%, compared to 6.875% for its $1.5bn 10 year in 2014.
A head of DCM said that Kenya had been prudent in raising cash through a number of channels and would therefore be able to rely on multiple investor bases to refinance its debt.
Zambia, in contrast, “has relied heavily on the Eurobond market”. The sovereign’s first bond matures in September 2022. Kenya’s government debt burden is 57.1% of GDP while Zambia’s is 55.6%.
Armenia will repay a $700m bond in September 2020. The bond was priced at 98.6 in September 2013 and carried a coupon of 6%.
Senegal and Namibia will face their first maturities in 2021; Zambia and Bolivia in 2022; Cameroon, Rwanda, Paraguay in 2023; Ethiopia in 2024; Tajikistan, Angola and Armenia in 2025.