The real problem with Africa’s pile of eurobond debt is the repayment terms, not just the amount of debt, African Development Bank President Akinwumi Adesini tells Bloomberg. Africa currently isn’t facing a debt crisis, but governments seem to be avoiding negotiating more favorable terms for eurobond issuance and commercial loans. “The short-term maturity of some of these debts do not match the long-term revenue streams,” he tells the business information service. “You are going to have to pay back when you are not earning money.”

There have been a lot of eurobonds coming out of Africa, and investors are biting because of high yields: In the past two years alone, African countries have issued USD 53 bn-worth of sovereign eurobonds, according to Bloomberg data. And over the past decade, a borrowing frenzy has pushed up African countries’ FX-denominated debt pile to USD 115 bn, the Financial Times said last month. USD-denominated African sovereign debt instruments have yielded 21% in 2019, which Bloomberg says outpaces all other emerging market regions. A lot of eurobond issuances from African countries are oversubscribed “because people see [a chance] to make a killing,” Adesini says.

Some countries — including Egypt — have been moving to extend the maturity of their eurobonds in a bid to make their repayment feasible. Egypt’s last USD 2 bn triple-tranche eurobond issuance in November included a USD 500 mn tranche of 40-year bonds carrying a yield of 8.15%. The Finance Ministry said at the time that these are the longest-maturity bonds in the Middle East and North Africa. Ghana also reached the same milestone for sub-Saharan Africa when it issued USD 3 bn-worth of eurobonds last month that included a 40-year tranche, according to Bloomberg.