The World Bank (WB) has warned African states against issuing Eurobonds to refinance maturing bonds and commercial loans instead of investing in infrastructure projects.

The Bank says the new loans acquired at a relatively higher cost could exacerbate the risk of default and hinder stability of African economies as increased global risks and tighter financial conditions raise borrowing costs and reinforce market fragmentation.“Sub-Saharan African countries might face significant refinancing pressures as previously issued Eurobonds near maturity, posing significant challenges to debt sustainability,” the multilateral lender says in its Africa Pulse report for October 2025.“Global uncertainty, heightened geopolitical tensions, and continued monetary tightening in advanced economies have significantly increased the cost of capital for African sovereigns.”Tighter financial conditions make it more expensive and difficult for businesses and consumers to borrow, leading to reduced spending, lower investment, and a slower economy. These conditions are reflected in higher interest rates and reduced access to credit.

Several African countries have issued Eurobonds to refinance maturing Eurobonds to ease refinancing pressures in the short-term.

It is however argued that while issuance of bonds to pay back maturing debt helps ease short-term refinancing pressures, external debt sustainability remains a cause for worry for African states.“The region’s redemption (refinancing) schedule reveals liquidity pressures in multiple Sub-Saharan African sovereigns, with peak pressures in 2026 that could have key implications for the risk premium,” says report.“The cost of non-concessional (private) borrowing has also increased sharply for the few Sub-Saharan African countries with access to global capital markets.”Benin, Cameroon, Côte d’Ivoire, Kenya, Nigeria, Senegal, and South Africa collectively raised more than $12 billion in new Eurobonds in 2024, with several of these issuances strategically used to refinance maturing Eurobonds and commercial loans.

Three additional issuers have returned in 2025, although at sharply divergent costs.

Benin issued at a yield of 8.63 percent in January, Kenya at 9.95 percent in February, and Gabon at 12.70 percent in February—the highest yield ever recorded for an African sovereign.

Kenya has raised $4.5 billion in new Eurobonds in barely two years to buy back maturing debt.

In February 2025, Kenya repeated this feat with another $1.5 billion Eurobond, this time with an 11-year tenor. The proceeds were used to refinance a $900 million Eurobond issued in 2019 and maturing between May 2025 and May 2027.

The bond was sold in two tranches of seven and 12 years, which raised $750 million each at interest rates of 7.875 percent and 8.8 percent respectively.

The February 2024 and February 2025 bonds were costly, with yields of 10.375 percent and 9.95 percent respectively -- significantly higher than the yields paid by Kenya in the past.

According to the World Bank, South Africa has the largest bond redemptions between 2025 and 2027, equivalent to three percent of GDP over the period.

Senegal faces bond redemptions totalling $1.1 billion between 2026 and 2028, with one-third maturing in 2026.

After concluding debt restructuring, Ghana now faces a bond redemption of $500 million (0.7 percent of GDP) in 2025, spiking to 1.2 percent of GDP in 2026.

From 1.7 percent of GDP in 2024, Kenya’s Eurobond repayment pressure will ease between 2025 and 2027, as the country bought back maturing bonds.

The report notes that sovereign bond markets have emerged as a critical, though selective, source of development finance for countries in the region.

Since 2010, 16 Sub-Saharan African countries have issued Eurobonds.

Market access expanded notably between 2016 and 2019, with the number of issuing countries rising from two to six and issuance volumes also tripling -- from $5 billion to $15.3 billion during this period.

The Covid-19 pandemic disrupted this trend in 2020, constraining market access to just three countries, Côte d’Ivoire, Gabon, and Ghana.

But, as global financial conditions improved in 2021, market access rebounded strongly, with a record nine Sub-Saharan African countries successfully issuing sovereign bonds.“Access to international bond markets remains restricted and contingent on external conditions, regardless of past participation,” the WB report says.

The 2021 recovery proved short-lived, as no Sub-Saharan African country accessed international markets in 2023, amid rising global uncertainty and tighter financial conditions.

“Although some issuers have managed to re-enter markets, spreads remain elevated, and investor differentiation has intensified. Access is now concentrated among a narrower group of countries with stronger fiscal positions, credible macroeconomic frameworks, or strategic relevance,” the report says.“The sharp divergence in yields across recent issuances underscores the importance of credible policy signalling, transparent debt management, and pre-emptive refinancing strategies in navigating an increasingly unforgiving external financing landscape.”

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