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Ghana, Kenya, Ethiopia on edge as Africa fraught with default risks

“The backdrop of aggressive monetary policy tightening by central banks of advanced economies including the Fed (US Federal Reserve) together with growing risk-off sentiment amid concerns about a global recession is certainly unfavourable for African sovereign dollar bonds,” Virág Fórizs, Africa economist at the London-based Capital Economics, tells The Africa Report.

“In much of Sub-Saharan Africa, we expect Eurobond yields to rise further over the coming months. In Ghana and Kenya in particular, mounting investor concerns about balance of payments problems and public debt woes have weighed on sovereign dollar bonds in addition to the unfavourable global backdrop. Default risks are also high in Ethiopia, especially following the latest flare-up in the country’s internal conflict.”

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