StanChart Says Debt Discounts Make Africa Ripe for Nature Swaps
- African debt yields are about 120 basis points above peers
- One African nation has concluded a large debt-for-nature swap
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The deep discount at which many African countries’ debt trades makes the continent a prime location for debt-for-nature swaps, according to a banker who helped conclude the first execution of the instruments.
The yields on African bonds are about 120 basis points higher than those of emerging-market peers, according to JPMorgan Chase & Co. data. This premium makes it attractive for the swaps, where sovereign debt is typically bought on the secondary market at a steep discount and part of the savings are redirected toward conservation.