Africa’s sovereign risk premiums over US Treasuries have fallen to their lowest level since 2018, closing at 335 basis points on Thursday, Bloomberg reported. The decline comes as distressed issuers on the continent have dropped to just three countries: Senegal, Gabon and Mozambique.

The narrowing spreads have drawn investor attention to African debt markets, with UK-based fund manager Ninety One Plc identifying opportunities in both hard-currency and local-currency bonds. The firm highlighted hard-currency markets in countries where credit-rating upgrades may be underpriced, alongside high-yield local markets benefiting from improving macroeconomic trends and supportive technical conditions.

Thys Louw, an emerging-market fixed-income portfolio manager at Ninety One overseeing 1.7 billion US dollars in assets, described some prospects as “idiosyncratic turnaround stories,” citing Senegal’s progress under ongoing reforms and resilient access to regional markets.

Major oil exporters including Nigeria and Angola have shown fiscal improvements, bolstering investor sentiment. In Nigeria, the naira remains an attractive carry market, while Egypt’s pound is expected to benefit from a strengthened fiscal position and extended support from Gulf states, according to Ninety One’s outlook cited by Bloomberg.

Kenya presents a more cautious case. With a stable shilling and authorities following an easing cycle, the market offers “limited upside potential” after several strong years, the firm said.

The broader rally in emerging-market assets has contributed to falling yields across Africa, with investor confidence stabilising amid improving macroeconomic conditions.