5 days ago
Local debt markets could shield Africa as funding sources shrink, Moody's says
African countries should focus on developing liquid local debt markets in their home currencies to protect them from global volatility and fickle foreign investors, said Moody's global head of sovereign and subsovereign risk, Marie Diron.
Credit ratings for some countries on the continent have begun climbing after a rough cycle of cuts and outlook downgrades spurred by the stress the Covid-19 pandemic put on sovereign balance sheets.
However, as trade wars and geopolitical risks roil global markets, the countries that are faring the best, such as Benin and Ivory Coast, are the ones that have beefed up local funding, Diron said.
'Domestic funding, I think that has to bridge that gap,' she told Reuters in an interview on the sidelines of an event by the Mo Ibrahim Foundation in Marrakesh, Morocco.
Diron said deep and liquid domestic debt markets had in part shielded SA's rating, and borrowing costs, from the turmoil of US President Donald Trump's adversarial approach to President Cyril Ramaphosa's government.
Using revenue efficiently, lowering exposure to foreign currency debt and lengthening maturities were also key factors supporting African countries' credit ratings and market access, she said.
