Given the turmoil in the UK and rampant rise in the US dollar and US Treasury yields, the sell-off in African assets persisted at the start of the week.
The Bloomberg Africa Bond Index (ex. SA), which we use as a proxy for the performance of local currency African sovereign bonds, fell to a more than two-year low yesterday, bringing the losses in the index since the start of the year to just under 13 percent. While there has been a shift from major international lenders in support of fiscally fragile African countries, near-term risks (three months) remain skewed to the downside.
That said, the next few months will present a great buying opportunity for investors, with valuations and bond yields in the African bond market already looking extremely attractive.