Frontier markets are back. Several African countries have recently returned to global financial markets, placing foreign-currency bonds with international investors. The question is whether they are back for good, or whether someone or something—namely, the US Federal Reserve—will throw a wrench in the works.
Let’s start with the facts. In January and early February, Côte d’Ivoire and Benin were able to place $3.35 billion of bonds with international investors. Côte d’Ivoire’s issue was more than three times oversubscribed, and Benin’s more than six times. Kenya followed with a $1.5 billion Eurobond that attracted more than $5 billion in orders. This activity marked the end of a two-year dry spell when African borrowers were locked out of international capital markets.
In several cases, the revenue raised will be used to buy back debt…
