By Kumeshen Naidoo, Head of Debt Capital Markets, and Narisa Balgobind, Head of Debt (AR), at Absa
Kenyan beverages giant East African Breweries recently refinanced an existing KES 11 billion corporate bond through a medium-term note priced at 11.8%, marking the first issuance under its newly approved KES 20 billion programme. The timing mattered. Kenya’s 10-year government bond yield had eased to around 13.3%, its lowest level since mid-2022, which made the economics of refinancing workable again. The offer received strong demand, driven by active participation from banks, fund managers, pension schemes, and retail investors. This resulted in an oversubscription of 152.4%, which in turn allowed EABL to upsize the issuance to KES 16.7 billion.
What that deal underlined is a point many practitioners make when they look at African markets: liquidity does exist for the right opportunities. The market has grown, rates have started to come off their post-pandemic highs, and that shift is beginning to change borrower behaviour. As the cost of funding becomes less punitive, investment decisions that were previously deferred are returning to the table, including acquisitions and expansion activity where financing plays a critical role.
This opens the space to think more creatively about funding structures and where capital is best deployed.
As most businesses grow and their funding requirements evolve, borrowers begin to look beyond traditional bank funding towards a broader range of available funding sources. Borrowers increasingly challenge pricing, terms and conditions, the funding purpose, and the level of security they are willing to provide. At this stage, transactions often shift into the syndicated loan space. According to the OECD, syndicated lending in Africa has expanded significantly over the past two decades, with issuance and outstanding volumes almost doubling. These types of transactions are often more nuanced and require a higher level of sophistication.
Accessing the continent’s bond market, however, is far more involved.
Issuers need to prepare an issuance programme, appoint arrangers, external legal counsel, trustees, paying agents, and calculation agents, engage with investors, comply with listing rules, and meet ongoing disclosure requirements around financial reporting. It is no wonder then that Africa’s corporate bond issuance has been particularly weak, with outstanding amounts falling from USD 52 billion in 2010 to USD 38 billion in 2024, according to the OECD. It also found that despite Africa contributing 2.5% of global GDP, it only contributed 0.1% of the global Corporate Bonds outstanding.
Yet there is significant room for development.
Regulation itself is not the constraint; most African markets have straightforward issuance and listing requirements. What differentiates outcomes is scale, understanding, and flexibility. Those factors ultimately shape whether an issuer accesses the bond market or remains in the loan market, which is typically easier to navigate and more adaptable.
In some cases, issuers can access the bond market at a significantly lower cost, sometimes at levels the loan market cannot match. In practice, this usually applies to specific parts of a transaction rather than the entire structure. As a result, blended financing then becomes more common, allowing borrowers to combine lower-cost market funding with loans or other instruments that provide the flexibility, tenor, or risk coverage. And this is starting to feature more prominently on the continent. According to research by Convergence, Africa accounted for around 40% of global blended finance transactions in 2024, representing roughly a third of total volumes transacted, and reflecting the evolution of capital markets towards more structured solutions rather than reliance on a single instrument
Looking ahead, innovation in Africa’s capital markets is likely to focus on developing new products and demonstrating the ability to execute transactions. When East African Breweries first accessed the Kenyan bond market in 2021, it marked the first corporate issuance in that market in nearly five years. The transaction helped reopen the market and signalled to other issuers that investors were active, execution was achievable, and that pricing could be made to work.
Outside South Africa, capital markets across much of the continent are relatively shallow. That limits how effectively domestic savings can be channelled into long-term investment. Equity markets are small and thinly traded, and bond markets lack the depth and reference points that make pricing and secondary activity easier. To foster real development across the continent, this is where the focus must be.