– Egypt, Angola, South Africa, Nigeria face significant external debt repayments
– S&P expects credit metrics to stabilize more than improve
– Governments to use liability management to mitigate refinancing risks
Johannesburg – S&P Global Ratings has cautioned that African governments face rising debt risks as hard-currency repayment schedules in 2026 increase pressure on external buffers, contributing to rollover risks.
The agency’s latest African sovereign outlook report published on Monday shows that government external debt repayments are now over three times larger than in 2012.
“Structurally high debt and low, concentrated revenue bases will continue to pose key risks and, with government external debt repayments likely to exceed $90 billion this year, external vulnerabilities have also increased,” S&P’s Benjamin Young wrote in the report.
“Government external debt repayments are approaching a peak.”
Egypt accounts for nearly one-third of this year’s tally with $27 billion due in principal repayments, followed by Angola, South Africa, and Nigeria.
S&P noted that average sovereign ratings in the region have reached their highest levels since late 2020, reflecting reform momentum and improved growth. However, it was a sign of key credit metrics stabilising rather than significantly improving, as structural adjustments to reduce debt burdens tended to require longer timelines, S&P analysts said.
However, some of them, such as Republic of Congo, had to offer double-digit yields in recent months, widely seen as too expensive for issuers, and a number of governments have resorted to off-market deals such as private placements or total return swaps.
Economic growth is projected to remain steady, with average real GDP growth forecast at 4.5% in 2026, while fiscal deficits are expected to modestly consolidate to 3.5% of GDP. Nevertheless, government debt is anticipated to stay elevated at around 61% of GDP on average.
The rising debt redemption burden is leading several governments to turn to liability management strategies, such as buybacks, exchanges, and maturity extensions, to reduce refinancing risks.
Notable users of such approaches include Côte d’Ivoire, Benin, Uganda, Republic of Congo, Mozambique, Kenya and South Africa.
Easing global financial conditions and investors seeking to diversify their investments have reopened the door for a number of African sovereigns to tap global capital markets.
*Colleen Goko, editing: Karin Strohecker, Peter Graff – Reuters
