S&P sees SSA commercial borrowing decline to $37bn

A Standard & Poor’s Ratings Services report “Sub-Saharan Africa Debt Report 2016” published Monday sees borrowing to decrease by 20 percent when compared to long-term commercial debt issuance in 2015.

The 18 publicly rated sub-Saharan African (SSA) sovereigns will borrow an equivalent of $37billion from long-term commercial sources in 2016, projects Standard & Poor’s Ratings Services.

Commercial Borrowings refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments like floating rate notes and fixed rate bonds availed from non-resident lenders with minimum average maturity of 3 years.

S&P said it expects that $23.6 billion (64%) of total commercial borrowing will be raised in local currency, the rest in foreign currency.

“Some 38%, or $14 billion, of the sovereigns’ gross borrowing will be to refinance maturing long-term debt (compared with an estimated $18 (39%) billion in 2015). We expect a total estimated net borrowing requirement of $23 billion in 2016.

Consequently, we project that rated SSA sovereigns’ commercial debt stock will reach an equivalent of $300 billion by the end of 2016, and that the total commercial and concessional debt stock will reach about $403 billion, a year-on-year increase of $25.8 billion (or 6.8%). We expect that the outstanding short-term (under one-year) commercial debt stock will reach $53 billion at year-end 2016”, according to S&P.