Tsinghua report exposes Africa's bond crises

'Reckless operations' by European, US institutions triggering financial woes

Following Asia and Latin America, Africa is likely to confront a bond crisis caused by the "reckless operations" of European and US financial institutions, according to a Tsinghua University report issued on Wednesday.

The report is the outcome of a project conducted by a research team led by Tang Xiaoyang, a professor in the Department of International Relations at Tsinghua. It said from 2023 to 2025, African countries will enter a bond repayment peak with hundreds of billions of dollars in bonds maturing and could face default risks, affecting dozens of low and middle-income bond-issuing countries.

Such risks were brought by the "reckless operations" of large European and US investment institutions in African countries. If the latter fails to refinance, they will face a chain reaction of defaults, rating downgrades, foreign exchange shortages and currency depreciation, which may lead to further economic recession. Under the current global economic downturn, the default crisis is likely to develop into a comprehensive challenge to economic conditions, currency values and even political stability of dozens of low and middle-income bond-issuing countries, said the report.