A trend analysis of Eurobond yields in Africa. (11th March 2022)

• Record Type: Journal Article
• Authors: Mutize, Misheck
• Is Part Of: International journal of monetary economics and finance. Volume 15:Number 1(2022)
• Page Start: 19
• Page End: 34
• Publication Date: 2022-03-11
• Subjects: Eurobonds -- yields -- Africa -- debt trap -- yield curve -- leverage -- forecasting; Monetary policy -- Periodicals; Finance -- Periodicals; Economics -- Mathematical models -- Periodicals; 332.4
• Languages: English
• ISSNs: 1752-0479

Abstract

This study applies econometric forecasting methods to estimate the trend of Eurobond yields in eight African countries over the period from January 2010 to May 2020. Results of the analyses show that the majority of countries' bond yields are forecasted to be on an upward trend. This implies that if African countries do not act to address the rising interest burden, they are at risk of falling into debt trap. This study thus recommends that countries should design their own yield curves and be more determinant in the amount of interest they should pay on Eurobond bonds. In addition, they should leverage on the high demand of African Eurobonds to bargain for competitive yields, improve the integrity and transparency in managing Eurobond proceeds to establish lines of accountability.