African governments amass record-breaking debt, raising concerns on repayment: African countries have amassed FX-denominated sovereign debts at a record rate over the past few years, fueling concerns that some governments will struggle to repay these debts as they mature during the next decade, reports the Financial Times. The borrowing frenzy has brought the total amount of outstanding sovereign eurobonds held by 21 African countries to USD 115 bn — and yield-hungry investors have been all too happy to bite.

The notion of some of these countries finding themselves in a tough spot when it’s time to pay the pied piper is not farfetched, analysts say. Egypt, Morocco, South Africa, Tunisia, and Nigeria have met their foreign bond repayment obligations, but not all countries are in a similarly comfortable position. “If the repayment date comes up when a currency is doing badly or there’s off-risk sentiment, they’re pretty exposed,” says Capital Economics senior emerging markets economist John Ashbourne.

Eurobond debt exposure is similarly an issue with emerging markets: Fitch Solutions had warned in a webinar we attended last year that EMs’ borrowing binge since the 2008 global financial crisis has created a “Achilles heel” in the form of USD-denominated debt exposure. The IMF said shortly thereafter that EM state-owned enterprises in particular are also facing a “concerning” rise in their debt burdens, which account for a “significant portion” of all EM debt securities. EMs’ FX funding needs are therefore expected to soar this year, when USD 800 bn-worth of debt on foreign currency bonds and loans are due for repayment.