African nations are expected to borrow $155 billion in long-term commercial debt this year, S&P Global Ratings said in a report, a ​10% increase on the previous year, to refinance maturing debt ‌and navigate growing fiscal obligations at home.

Projected borrowing for 2026 will raise total outstanding sovereign commercial debt to ​just above $1.2 trillion, the report said, equivalent to about half ​of the countries’ economic output by year-end.
Egypt is projected to ⁠be the biggest issuers, along with South Africa and Morocco, the ​report said.

Fallout from the Iran war could curb African nations’ borrowing plans ​this year and have an impact on the cost of fresh issuance, but the effect could be limited by benign liquidity conditions in global financial markets, compared with ​previous years.

“We expect the war and its implications for hydrocarbon shipping ​lanes, particularly the Strait of Hormuz, will begin moderating over the next few weeks, ‌but ⁠if the war continues beyond that, it could impair fiscal positions, inflation profiles, and financing plans across Africa,” S&P said.

With most countries in the region depending on imports of refined fuel products, a surge in retail ​prices could pressure ​government finances and ⁠budget deficits in countries like Angola that provide fuel subsidies.

Cost of debt across the region can vary between ​individual economies but the annual median of the 27 ​rated ⁠African issuers stands at $1.5 billion, lower than in other regions S&P said. This reflects a reliance by governments on cheaper credit from multi-lateral lenders like ⁠the ​World Bank in overall borrowing.

“Favourable external financing costs, ​which are at multi-year lows, provide some reprieve, as governments can refinance upcoming foreign currency ​maturities at lower costs,” S&P said.

REUTERS