African sovereign eurobond spreads have compressed to their tightest levels since September 2024, with the JP Morgan EMBI+ Africa index showing average spreads of 520 basis points over US Treasuries as of March 25, 2026—down from 700 basis points at the start of the year.
The rally has been driven by renewed institutional investor appetite, with foreign fund flows into African sovereign debt reaching $3.2 billion year-to-date according to Institute of International Finance data, marking the strongest quarterly performance since 2021.
Ghana and Zambia Lead Recovery
Ghana’s restructured eurobonds have emerged as the standout performers, with spreads on the new 2029 notes trading at 480 basis points, down from over 2,000 basis points during the height of the debt crisis in 2022. The successful completion of Ghana’s $13 billion debt restructuring in December 2025 has restored investor confidence in the credit.
“Ghana’s disciplined fiscal approach post-restructuring, combined with the IMF program’s credibility, has fundamentally shifted investor perception,” said Sarah Chen, senior portfolio manager at Ashmore Group, which manages $4.8 billion in African debt. “We’re seeing genuine structural improvements, not just cyclical tailwinds.”
Zambia’s eurobonds have similarly tightened, with the 2027 notes now yielding 8.2%, down from 12.4% at year-end 2025. The completion of Zambia’s own debt restructuring and copper price recovery to $4.10 per pound have underpinned the improvement.
Nigeria and South Africa Drive Volume
Nigeria has been the primary beneficiary of renewed investor flows, attracting $1.1 billion in the first quarter alone. The country’s 2032 eurobonds tightened 85 basis points to 385 basis points over Treasuries, supported by oil production increases to 1.7 million barrels per day and foreign exchange reforms that have stabilized the naira.
South Africa, while facing domestic political uncertainties ahead of local elections, has seen spreads on its 2030 eurobonds compress to 195 basis points from 240 basis points in January. The rand’s 8% appreciation against the dollar this year has provided additional tailwinds for foreign investors.
“The South African story remains compelling from a relative value perspective,” noted James Wright, emerging markets strategist at Standard Chartered. “Despite political noise, the fiscal trajectory is stabilizing and the current account is in surplus.”
Credit Rating Momentum Builds
The improved market sentiment has coincided with positive rating actions from international agencies. Moody’s upgraded Nigeria’s sovereign rating to B2 from B3 in February, citing improved governance and foreign exchange liquidity. Standard & Poor’s revised Ghana’s outlook to positive from stable, signaling potential upgrade momentum.
Angola’s credit profile has also strengthened significantly, with Fitch raising the outlook to stable from negative in March. The country’s eurobond spreads have compressed 120 basis points year-to-date to 420 basis points, reflecting improved oil revenue management and debt sustainability metrics.
Primary Market Revival
The secondary market rally has reopened primary market access for several African sovereigns. Kenya successfully priced a $1.5 billion dual-tranche eurobond in February at spreads of 450 basis points for the 10-year tenor, significantly tighter than the 600 basis points initially expected.
Ivory Coast is preparing a potential $2 billion issuance for Q2 2026, with preliminary investor meetings scheduled for April. Morocco, maintaining its investment-grade rating, is considering opportunistic market access given favorable conditions.
Risks and Outlook
However, analysts warn that the rally may be vulnerable to external shocks. Rising US Treasury yields, currently at 4.2% for the 10-year, could pressure African spreads wider if Federal Reserve policy turns more hawkish than expected.
“While fundamentals have improved, African spreads remain sensitive to global risk sentiment,” cautioned Maria Santos, chief economist at Renaissance Capital. “Any deterioration in China’s growth outlook or commodity price volatility could quickly reverse recent gains.”
Domestic risks also persist, particularly around upcoming elections in Nigeria and South Africa, as well as ongoing security challenges in the Sahel region affecting regional stability premiums.
Investment Implications
For institutional investors, the current environment presents both opportunities and risks. The compression in spreads has reduced potential returns, but improved credit fundamentals suggest lower default risks. Portfolio managers are increasingly focused on idiosyncratic credit selection rather than broad beta exposure to the continent.
Policymakers across Africa face the challenge of maintaining fiscal discipline while meeting development financing needs. The improved market access provides breathing room, but sustainable debt management remains crucial for preserving investor confidence and avoiding future restructuring cycles.
