…countries increasingly turn to multilateral lenders as debt risks persist
African governments raised about $18 billion and €2 billion from international markets in 2025, up from $12.8 billion in the previous year, as easing global financial conditions reopened the Eurobond window for several frontier issuers, according to a new report by S&P Global.
The report, Africa Credit Rating Trends 2025 In Review: Divergence And Resilience, said access to capital remains uneven across the continent, with stronger credits securing larger volumes at lower cost while weaker sovereigns continue to face elevated borrowing expenses.
The rebound comes as more African countries — including Kenya, Côte d’Ivoire, Republic of Congo, Cameroon and Benin — returned to international markets after nearly two years of constrained access, supported by easing borrowing costs and renewed investor appetite.
Bloomberg data show dollar-denominated sovereign bond sales across the region have already reached $5.95 billion since February this year, the strongest start to the period since 2013. Additional issuances are expected, with Angola reportedly preparing a transaction of up to $1.7 billion.
“Overall, the cost of funding in 2025 was 100 basis points lower than in 2024, averaging 7.7 percent after considering currency swaps for Benin and Côte d’Ivoire bonds. Morocco’s low euro rates also contributed to overall reduced funding costs, while other African sovereigns issued in US dollars at higher rates,” S&P said.
The agency noted that US dollar issuance continued to dominate the continent’s external borrowing, underscoring investors’ persistent preference for hard-currency instruments.
Debt risks keep multilaterals in focus
Despite the market reopening, African sovereigns are expected to deepen reliance on multilateral lenders and accelerate reforms this year as debt vulnerabilities continue to constrain fiscal flexibility.
Samira Mensah, S&P’s head of National Ratings and Analytics for Africa, said more than 20 countries across the continent face elevated debt risks or severe fiscal pressures, citing IMF data. These constraints are pushing sovereigns toward more stable and predictable financing sources.
Multilateral development institutions are therefore becoming increasingly central to sovereign funding strategies, offering lower-cost financing and longer repayment tenors than private capital markets.
According to S&P, recent adjustments to multilateral lending frameworks could unlock between $600 billion and $800 billion in additional sovereign lending globally. Based on proportional estimates, Africa could secure between $90 billion and $120 billion of that capacity.
Issuance leaders
Egypt led the market reopening last year after a four-year hiatus, raising nearly $2 billion in two tranches in January at an average coupon of 9.04 percent amid strong demand. It later issued a $2.5 billion dual-tranche sukuk at an average of 7.16 percent with a shorter average tenor of about five years, compared with six-and-a-half years for its Eurobonds.
South Africa followed with a $3.5 billion issuance at an average coupon of 6.69 percent and a longer average maturity of 21 years.
Among mid-sized issuers, Angola and Côte d’Ivoire each raised $1.75 billion. Angola priced near Egypt’s levels, while Côte d’Ivoire secured a lower 6.4 percent coupon after executing a euro-dollar currency swap.
Nigeria issued $2.35 billion through a dual-tranche structure, pricing a 10-year bond at 8.62 percent and a 20-year note at 9.12 percent. Kenya executed two dual-tranche deals totalling $3 billion to extend maturities and ease refinancing risks.
Republic of Congo and Benin returned with smaller deals. Congo paid close to a 10 percent coupon on a seven-year bond — its first in two decades — while Benin achieved a lower effective cost of 6.48 percent after a dollar-euro swap on a 16-year issuance, reflecting stronger investor confidence.
Morocco was the only sovereign to tap the euro market, raising €2 billion at about 4.3 percent with an average maturity of seven years — the lowest coupon among peers. The country continues to fund infrastructure while managing currency risk through euro issuance aligned with its strong trade ties to the European Union.
Sukuk momentum builds
S&P said improved global credit conditions and Benin’s stronger investor track record enabled the country to return again in January 2026, combining a $350 million Eurobond due 2038 — fully hedged into euros at 6.19 percent — with its inaugural international sukuk.
“This raised $500 million over seven years at 4.92 percent and drew orders totaling $7 billion, highlighting significant interest from Islamic investors in Africa. As the sukuk market continues to slowly expand in Africa, we expect other African sovereigns to follow. Nigeria is a frequent issuer in its domestic market and is eyeing its first $500 million international sukuk in 2026,” S&P said.
Sustainable finance moderates
Sustainable bond and loan volumes moderated after the $13 billion raised in 2024, as governments focused on deploying proceeds from earlier deals and selectively tapped sustainability-linked loans.
Côte d’Ivoire secured a $500 million sustainability-linked loan, while Nigeria issued a N50 billion green bond in its domestic market in June.
Green bond activity nevertheless increased year on year, led by issuers in Mauritius and South Africa. The Industrial Development Corporation of South Africa issued a ZAR3.4 billion sustainable bond in two tranches, while Nedbank sold a ZAR2.5 billion social bond in December 2025 with support from the African Development Bank.
The AfDB also returned with a €500 million green bond, while sub-sovereigns entered the market. Lagos State issued nearly N15 billion in 2025, still modest compared with Cape Town’s landmark ZAR1 billion green bond in 2017.
Ratings landscape
Of Africa’s 54 sovereigns, S&P publicly rates 27. The agency expanded coverage in 2025 by assigning ‘B+/B’ long- and short-term ratings to the Republic of Guinea.
The number of investment-grade sovereigns rose to four from three, all within the ‘BBB’ category: Botswana at ‘BBB’, and Morocco, Mauritius and St Helena at ‘BBB-’.
Half of African sovereign ratings remain in the ‘B’ category, with fewer than a quarter rated ‘BB’ or above. Many of the lower-rated credits are concentrated in Middle Africa.
Ethiopia remains the only African sovereign in selective default (‘SD’) on foreign-currency debt as of end-2025, pending agreement with bondholders on its $1 billion Eurobond due 2024.
Ghana and Zambia have exited ‘SD’ following completion of their G20 debt restructurings, while Mozambique’s local-currency rating remains ‘SD’ due to ongoing domestic debt exchanges considered distressed.
