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Updated · Bloomberg · Aug 14African Local-Currency Debt Outperforms EM Peers as High Yields Fuel Demand
1 articles · Updated · Bloomberg · Aug 14Summary
- African local-currency government debt is beating broader emerging-market peers as investors intensify their search for yield.
- High yields and economic reforms are drawing buyers into the region’s domestic bond markets, strengthening demand for local sovereign paper.
- Carlos de Sousa of Vontobel Asset Management said investor appetite is so strong that current supply cannot fully meet demand.
- The outperformance highlights Africa’s local debt markets as a standout pocket within emerging markets while the global hunt for yield persists.
Insights
Why are investors aggressively buying African local debt while two dozen nations across the continent face severe external debt distress? Could Africa's massive but hidden domestic capital pools eventually replace foreign reliance and completely transform emerging market yields? What happens to this unprecedented local-currency debt rally if rigid global restructuring frameworks force unexpected sovereign defaults?