The relative resiliance of Africa's financial markets to social and political unrest in the north, and to the default of Côte d'Ivoire on last year's global bond, suggest that the continent's markets have taken one more step towards greater sophistication. Investors are increasingly differentiating one from another.

The unprecedented wave of social and political unrest that has rolled across north Africa and the Middle East - unseating political leaders in its wake - has taken its toll on Africa’s financial markets. Prices fell slightly on Nigeria’s $500m debut Eurobond shortly after its launch on January 21, and spreads on other dollar bonds - including 2007 issues from Gabon - widened as a result of the uncertain political situation.

Africa’s markets have had other crises to contend with. Amidst its own political crisis, on February 1 Côte d'Ivoire defaulted on the $2.3bn bond it issued in March 2010, when the country restructured all of its six defaulted Brady bonds.

So far, so familiar. But this time things look different. The damage is limited; deals are still getting done. London-listed Afren, for example, got away the first high-yield bond from an exploration and production company with sub-Saharan assets at the end of January, in the midst of the unrest.

A few years ago, this combination of unrest and the Ivorian default would have blown such a deal out of the water. Now an issuer may have to pay a slightly higher premium, but the deal will get done. Bankers talk about a certain level of decoupling of concern about bond issuance from the social and political unrest. There is an effect, of course, but the same can be said of virtually any event in the world’s globalised markets; one banker referred to the impact as “defendable”.

In the past, investors would have shunned a deal, drawing parallels between what was happening in the north, and what could happen elsewhere on the continent. After all, Africa has no shortage of countries with long-serving authoritarian leaders, youthful and growing populations, high unemployment and unequally distributed riches.

Now, investors are still aware of this, and other, risks - and rightly so. But emerging markets specialists say there is evidence that investors increasingly differentiate between markets in Africa, rather than treating them as a homogenous block: Ghana is not Gabon; Botswana is not Tunisia.

This is a step in the right direction.

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter