Ghana’s increasing debt vulnerability risks limiting its own ability to obtain much-needed loans, as well as that of its neighbors by casting doubt on the entire creditworthiness of sub-Saharan Africa. In October, the risk premium on Ghana’s eurobonds increased by nearly 150 basis points (bps) to a yield of more than 900 bps (9%) over comparable U.S. Treasury benchmark securities. This sharp increase underlines the country’s growing indebtedness and reliance on external financing as global credit conditions tighten and interest rate hikes take hold. But given that Ghana is one of the largest eurobond issuers in sub-Saharan Africa, it also indicates global investors’ increasing risk aversion, which will affect funding costs for 19 other countries in the region with outstanding eurobond debt....
