Risk Is Back: Investors Flock to Africa’s High-Yield Bonds After Tariff Turmoil

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Just weeks after a brutal tariff-driven sell-off rattled markets, traders are back loading up on what some call the “world’s riskiest debt.”
At the top of the list? Nigeria, Egypt, and Ivory Coast.

According to a report by BusinessMirror, funds like Vontobel Asset Management, Ninety One UK Ltd, and TCW Group Inc. are scooping up dollar-denominated junk bonds from high-yield emerging markets, calling the dip “overdone.”

Spreads Widened, But So Did Opportunity

In April, the EM high-yield spread over U.S. Treasuries jumped 37 basis points to 634 bps, signalling panic.
But here’s the twist: CDS (default insurance) barely moved, meaning traders see pricing pain, not credit doom.

As Carlos de Sousa from Vontobel put it:

"We had the ammo to re-enter at deep value, Nigeria and Ivory Coast were screaming buys."

Why Africa’s Risk Is Suddenly Attractive

For all the headline chaos, the fundamentals in parts of Africa are holding up.

According to investors:

  • Nigeria’s FX reforms and fiscal reset are gaining credibility
  • Egypt’s IMF alignment is anchoring inflows
  • Ivory Coast’s debt maturity profile is more manageable than perceived

And with developed markets stagnating under debt and rate uncertainty, Africa’s bonds offer 12–17% yields, too sweet to ignore.

Still Risky? Absolutely. But Calculated Risk Pays

No one's saying it's smooth sailing.

U.S. growth could stall.
More tariffs could shake global trade.
Local political shocks remain possible.

But compared to 2022–2023's brutal hikes and dollar dominance, 2025 looks like a relative opportunity window.

“This is a classic risk-on rebound,” says Thys Louw of Ninety One. “Selective sovereigns are trading like distressed assets, but they’re not distressed.”

Financial Juggernut’s Take:

This isn’t a stampede it’s a sniper strategy.
Traders aren’t blindly rushing in, they’re picking precise plays in sovereign bonds that look mispriced.

If the U.S. avoids hard recession and the Fed stays neutral, expect Africa’s debt markets to outperform expectations.
But one policy shock, or another geopolitical flare-up, could flip the script again.

For Nigerian Eurobond holders, now’s the time to watch inflow trends and spread movement.
For retail investors, don’t chase without understanding sovereign risk cycles.

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