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African bonds: Putting the past behind it?

For all the excitement about African Eurobonds, things have not always gone smoothly for investors in recent years.

In 2008, the Seychelles defaulted on more than $311 million in debt while in 2010 Côte d’Ivoire defaulted on its $2.3 billion Eurobond – it was not until June this year that it resumed coupon payments.

In Gabon, the government has missed a number of payments to its Eurobond sinking fund, leading Standard & Poor’s to suggest in September that the government’s "fiscal management has deteriorated in recent months".

Such episodes are a timely reality check, but they do not seem to be putting off investors to any great extent. According to Florian von Hartig, global head of debt capital markets at Standard Bank, most investors are willing to put the poor history of some countries behind them, provided that the economic story they can tell today is robust.

"It is different now; a lot has changed," he says. "Some of the government structures have changed in the respective countries. The way they communicate and operate with counterparties outside Africa has changed. Everyone has moved on. Is it perfect in Africa? No, of course not, because otherwise everyone would be rated triple-A. But there is a wind of change.

"African governments are well advised and are sensible enough not to come to the market just because the market is very hot.

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