Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Primary Credit Analyst: Ravi Bhatia, London (44) 20-7176-7113; ravi.bhatia@standardandpoors.com Secondary Contacts: Trevor Cullinan, Dubai (971) 4372-7113; trevor.cullinan@standardandpoors.com Christian Esters, CFA, Frankfurt (49) 69-33-999-242; christian.esters@standardandpoors.com Sophie-Aurore de Saint-Marcq, Paris (44) 20-7176-7115; sophie.desaintmarcq@standardandpoors.com Liliana Negrila, Frankfurt +49 69 33 999-248; liliana.negrila@standardandpoors.com Alexander Petrov, London (207)1767115; alexander.petrov@standardandpoors.com Patrick W Raleigh, London +44 (0)2071767194; patrick.raleigh@standardandpoors.com Gardner T Rusike, Johannesburg +27 (11) 214 1992; gardner.rusike@standardandpoors.com Benjamin J Young, London (44) 20-7176-3574; benjamin.young@standardandpoors.com

Table Of Contents
Related Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 1

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion
Standard & Poor's Ratings Services projects that the 17 sub-Saharan African sovereigns that it rates (see table 5) will borrow an equivalent of $61 billion from long-term domestic or global commercial sources in 2014. This would be a 49% increase in long-term commercial debt issuance compared with 2013. We expect that $48 billion of the total commercial borrowing of $61 billion will be raised in local currencies. About 26%, or $16 billion of the sovereigns' total gross borrowing will be to refinance maturing long-term debt, resulting in an estimated net borrowing requirement for new debt of $45 billion (see table 1). Consequently, we project that rated sub-Saharan African sovereigns' commercial debt stock will reach an equivalent of $315 billion by the end of 2014, and that the total commercial and concessional debt stock will reach $392 billion, up from $342, a year-on-year increase of $50 billion, or 14.6%. Overview We forecast borrowing by rated sub-Saharan African sovereigns from commercial sources, both domestic and international, will increase sharply to an equivalent of US$61 billion in 2014, compared with $41 billion borrowed in 2013. Of this total, $45 billion constitutes new borrowing, while $16 billion represents the rollover of existing debt. By year-end 2014, we project that the stock of total outstanding sovereign debt from commercial sources by rated sovereigns will have risen to $315 billion from $273 billion in 2013.

We project that during 2014 the share of commercial speculative rated sovereign debt will stand at 47% of total sub-Saharan commercial debt, while the share of rated investment-grade debt--primarily issued by South Africa--will stand at 53% of total commercial issuance (see chart 2). If borrowing from official lenders is included, we estimate overall long-term borrowing at $74 billion in 2014. The share of non-commercial official borrowing (bilateral and multilateral) is set to reach $13 billion. According to our calculations, Nigeria and Ghana will face the highest debt rollover ratios (including short-term debt) as a percentage of total debt among rated sub-Saharan African sovereigns, reaching 28% and 26%, respectively (see table 4). The rollover ratios of sovereigns with a higher proportion of official debt tend to be lower, because official debt typically has longer maturities than commercial debt. These estimates account for the 17 sub-Saharan African sovereigns rated by Standard & Poor's (see table 5). Our estimates focus on debt issued by a central government in its own name and exclude local government and social security debt, as well as debt issued by other public bodies and government-guaranteed obligations. This means, for example, that in Nigeria's case, we do not include the issuance of Nigeria's Asset Management Company, AMCON, to Nigeria's borrowing figures.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 2

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

In terms of commercial debt instruments, our estimates for long-term borrowing include bonds with maturities of more than one year issued either on publicly listed markets or sold as private placements, as well as commercial bank loans. All reported forecast figures are our own estimates and do not necessarily reflect the issuers' projections. Our estimates are informed by our expectations regarding central government deficits, our assessment of governments' potential extrabudgetary funding needs, and our estimates of debt maturities in 2014. Estimates that we express in dollars are subject to exchange rate variations. We expect that Nigeria and South Africa, sub-Saharan Africa's largest economies, will issue the lion's share of government debt in the region, at $36 billion in total, or about three-fifths of the total (see chart 1). Nigeria will issue $14 billion while South Africa will issue $22 billion. Nigeria's average debt maturity is shorter than South Africa's, hence its rollover ratio is higher. However, we expect South African issuance to contribute a significant share to total sub-Saharan African borrowing. Less than 20% of Nigeria's and South Africa's debt is issued in foreign currency. However, about 40% of South Africa's debt is held by nonresidents. We expect that Angola will be the third-largest issuer of commercial debt in 2014. We believe it will use this debt to refinance maturing debt and to continue to finance strategic projects for the country. Apart from Nigeria and South Africa, three other sovereigns--Uganda, Kenya, and Cape Verde--have more than one-half of their debt outstanding in local currency, while other rated sovereigns in sub-Saharan Africa have most of their debt in foreign currency, due to the dominance of official borrowing. An increasing number of sub-Saharan African sovereigns have begun accessing international debt markets. South Africa has been issuing for many years. In 2007 Ghana and Gabon also issued debt, of $750 billion and $1 billion, respectively. Senegal followed in 2009 with $500 million issuance, followed in 2011 by Nigeria, also with $500 million. In 2012, Zambia issued $750 million, while Angola issued a $1 billion structured transaction. The following year, issuance was led by Rwanda with a debut Eurobond of $400 million, followed by Ghana ($1 billion, including a $250 million buyback), Nigeria ($1 billion), and Gabon ($1.5billion). Of the sub-Saharan African sovereigns not rated by Standard & Poor's, Namibia issued $500 million in 2011 and Tanzania issued $600 million in early 2013. In 2014, we expect that Kenya will lead issuance, with a $1.0-$1.5 billion bond, possibly followed by Ghana with an issue between $750 million and $1 billion. We nevertheless expect that conditions for issuance in 2014 will become less favorable this year because U.S. Federal Reserve tapering may make emerging market issuance less attractive. However, frontier markets have fared better than major emerging markets and this trend is likely to continue in 2014.
Table 1

Sovereign Commercial Issuance And debt Of Rated Sub-Saharan African Sovereigns*

(Bil. $) Gross long-term commercial borrowing Of which amortization of maturing long-term debt Of which net long-term commercial borrowing Total commercial debt stock (year end) 2013e 41 12 29 273 2014f 61 16 45 315

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 3

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Table 1

Sovereign Commercial Issuance And debt Of Rated Sub-Saharan African Sovereigns* (cont.)
Of which short-term debt Of which debt with original maturity greater than one year (% GDP) Gross long-term commercial borrowing (% GDP) Of which amortization of maturing long-term debt (% GDP) Of which net long-term commercial borrowing (% GDP) Total commecial debt stock (year end) (% GDP) Of which short-term debt (% GDP) Of which debt with original maturity greater than one year (% GDP) *Refers to the 17 sub-Saharan African sovereigns rated by Standard & Poor's. e--Estimated. e--Forecast. 3.8 1.1 2.7 25.0 4.7 20.4 5.2 1.4 3.8 27.0 4.7 22.3 51 223 55 260

Chart 1

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 4

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Chart 2

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 5

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Chart 3

Table 2

Sub-Saharan African Gross Commercial Long-Term Borrowing*

(Bil. $) Angola Botswana Burkina Faso Cameroon Cape Verde Congo - Brazzaville DR Congo Gabon Ghana Kenya Mozambique Nigeria Rwanda Senegal South Africa 2013e 9.82 0.05 0.00 0.32 0.03 0.78 0.28 0.52 4.47 3.14 0.13 2.25 0.40 0.46 18.40 2014f 12.28 0.01 0.00 0.96 0.10 0.30 0.01 0.54 4.79 2.88 0.55 14.01 0.02 1.15 22.02 Share of 2014 total borrowing 20.26 0.02 0.00 1.58 0.16 0.49 0.02 0.88 7.90 4.75 0.92 23.11 0.03 1.90 36.33

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 6

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Table 2

Sub-Saharan African Gross Commercial Long-Term Borrowing* (cont.)

Uganda Zambia 0.07 0.34 0.09 0.92 0.15 1.51

Breakdown by foreign currency rating category A BBB BB B Total 0.05 18.40 12.59 10.43 41.47 0.01 22.02 26.83 11.76 60.62 0.02 36.33 44.26 19.40 100.00

*Refers to the 17 sub-Saharan African sovereigns rated by Standard & Poor's. e--Estimate. F--Forecast.

Table 3

Sub-Saharan African Total Commercial Debt As Of Year-End (Long- And Short-Term)*

(Bil. $) Angola Botswana Burkina Faso Cameroon Cape Verde Congo - Brazzaville DR Congo Gabon Ghana Kenya Mozambique Nigeria Rwanda Senegal South Africa Uganda Zambia Breakdown by foreign currency rating category A BBB BB B Total 0.8 150.2 74.5 47.8 273.4 0.5 165.6 91.2 58.0 315.4 0.2 52.5 28.9 18.4 100.0 2013e 27.1 0.8 0.0 1.7 0.9 2.4 2.7 2.5 13.7 14.0 1.2 44.9 0.9 2.7 150.2 3.1 4.5 2014f Share of 2014 total commercial debt (%) 32.1 0.5 0.1 2.3 1.0 3.7 3.4 2.9 16.5 15.1 2.8 56.3 1.2 3.1 165.6 3.3 5.4 10.2 0.2 0.0 0.7 0.3 1.2 1.1 0.9 5.2 4.8 0.9 17.8 0.4 1.0 52.5 1.1 1.7

*Refers to the 17 sub-Saharan African sovereigns rated by Standard & Poor's. e--Estimate. F--Forecast.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 7

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Table 4

Sub-Saharan African Central Government Debt Structure For 2013 And Rollover Ratios For 2014
--2013-Foreign Long-term Commercial Short-term currency fixed-rate Bi-/Multilateral debt (% of debt (% of debt (% debt (% of Inflation-indexed debt (% of total) total) of total) total debt) debt total) Angola Botswana Burkina Faso Cameroon Cape Verde Congo Brazzaville DR Congo Gabon Ghana Kenya Mozambique Nigeria Rwanda Senegal South Africa Uganda Zambia e--Estimate. f--Forecast. 76.5 33.0 0.0 32.5 47.6 49.0 45.0 62.0 61.4 61.9 18.0 86.8 42.0 38.1 99.1 50.2 56.3 9.8 3.2 0.0 3.3 0.6 2.9 0.2 1.9 20.0 15.5 2.6 29.6 11.3 2.8 13.7 15.1 16.8 59.7 67.0 97.0 71.8 47.1 85.1 78.1 92.6 54.4 41.8 88.0 16.1 79.0 68.9 8.5 49.8 56.3 57.1 29.8 72.2 98.2 91.8 72.6 94.9 83.4 41.4 51.2 88.6 57.2 86.6 87.5 67.1 84.9 68.0 33.1 0 0 0 0 0 0.9 1.5 0 0 8.8 0 0 0 18.9 0 0 23.5 67.0 100.0 67.5 52.4 51.0 55.0 38.0 38.6 38.1 82.0 13.2 58.0 61.9 1.0 49.8 43.7 --2014-Rollover ratio (% Rollover Bi-/Multilateral of total ratio (% debt (% of debt) of GDP) total) 20.9 14.2 1.7 6.2 3.6 3.8 6.5 9.5 26.0 21.1 2.5 28.3 11.4 11.6 14.7 13.3 16.7 5.7 1.8 0.6 1.3 3.6 1.4 1.4 2.2 14.5 11.1 1.3 5.4 3.4 5.6 7.1 4.3 5.6 26.8 75.0 100.0 63.9 48.9 39.8 46.8 38.7 32.2 35.8 73.7 11.9 51.3 60.1 0.8 55.1 41.3

Table 5

Sub-Saharan African Sovereign Ratings

Foreign currency ratings Local currency ratings Angola (Republic of) Botswana (Republic of) Burkina Faso Cameroon (Republic of) Cape Verde (Republic of) Congo (Republic of) Democratic Republic of Congo Gabonese Republic Ghana (Republic of) Kenya (Republic of) Mozambique (Republic of) Nigeria (Federal Republic of) Rwanda (Republic of) Senegal (Republic of) South Africa (Republic of) Uganda (Republic of) BB-/Stable/B A-/Stable/A-2 B/Stable/B B/Stable/B B/Stable/B B+/Stable/B B-/Stable/B BB-/Stable/B B/Negative/B B+/Stable/B B/Stable/B BB-/Stable/B B/Stable/B B+/Stable/B BBB/Negative/A-2 B/Stable/B BB-/Stable/B A-/Stable/A-2 B/Stable/B B/Stable/B B/Stable/B B+/Stable/B B-/Stable/B BB-/Stable/B B/Negative/B B+/Stable/B B/Stable/B BB-/Stable/B B/Stable/B B+/Stable/B A-/Negative/A-2 B/Stable/B

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 8

1265108 | 301112013

Sub-Saharan African Sovereign Debt Report 2014: Borrowing To Increase By 49% To $61 Billion

Table 5

Sub-Saharan African Sovereign Ratings (cont.)

Zambia (Republic of) Ratings as of Feb. 27, 2014. B+/Negative/B B+/Negative/B

Related Research
Global Sovereign Debt Report 2014: Borrowing To Increase By 2.7% To $7.1 Trillion, Feb. 27, 2014 Fiscal And External Weaknesses Constrain African Sovereign Ratings, Despite Strong Economic Growth, Nov. 12, 2013 Global Sovereign Credit Trends: Downgrades Are Likely To Outnumber Upgrades Again In 2014, Dec. 17, 2013 Sovereign Risk Indicators, Dec. 13, 2013 (Interactive version also available at www.spratings.com/sri) Under Standard & Poor's policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook. Research Contributor: Ekta Bhayani

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 9

1265108 | 301112013

Copyright 2014 Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P's opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription) and www.spcapitaliq.com (subscription) and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

FEBRUARY 27, 2014 10

1265108 | 301112013