Defaults, distress dim African banks’ appetite for government bonds to protect profit margins

Moody’s warns that mounting financial pressures across Africa will push commercial banks to adopt a more cautious stance toward sovereign lending.

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African banks are showing a waning appetite for government bonds in the wake of debt defaults and restructuring programmes in Zambia, Ethiopia and Ghana.

Global rating agency Moody’s says the financial challenges wreaking havoc in many African countries will make commercial banks on the continent more cautious in lending to governments, in a bid to forestall the potential for debt default and protect their profit margins.