Risks of Financial Market Debt

Abstract

Although markets can be a useful source of financing, their loyalty is not guaranteed. Sentiment can shift quickly if a sovereign’s policies change, its outlook deteriorates, or even if something goes wrong in another part of the globe. African countries can often find themselves shut out of the markets during a bout of global risk aversion. The strength of market access varies across African sovereigns and can be assessed by looking at credit ratings, bond yields and bond spreads. The positives and negatives of market access need to be carefully weighed.