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Driving Investment into Bond Markets in Mauritius and Morocco

The two join eight African countries that are part of the Bloomberg African Bond Indices (ABABI) to provide investors with a tool to measure and track the performance of Africa’s local bond markets. The set of indices, which are administered by the African Development Bank (AfDB), are calculated by the global index provider and media giant Bloomberg. Indices are used as a benchmark against which the performance of a financial instrument can be tracked and to make comparisons within a region, industry sector or other asset class. It is hoped that ABABI will help drive investment into bond markets in Mauritius and Morocco, which are two of Africa’s better rated issuers. Morocco, Mauritius, Senegal and South Africa are the only African countries that are above the B rating of “speculative” and “subject to high credit risk”, given by the bond ratings agency Moody’s.  African countries have come under pressure to develop their domestic debt markets to meet state and corporate borrowing needs. Many rely on international markets where debt is issued in Euros and dollars and sovereigns are exposed to exchange rate risk. Some countries like Tanzania remain wary of international investment in domestic markets and will not allow foreign investors to buy local bonds. Other issues include the lack of a corporate participation, with governments accounting for around 75% of all debt issuance across local markets. The ABABI was introduced in 2014 in partnership with the African Financial Markets Initiative (AFMI) to deepen debt markets across the continent.