(Ecofin Agency) - Investors reacted well to Axian Telecom's first international bond market transaction in 2022. But compared to 2021, they appear less enthusiastic about telecom operator debt in general.

The Pan-African telecom service provider Axian Telecom has just completed successful fundraising on the international bond market, mobilizing $420 million. The operation attracted major institutional investors, such as the Commonwealth Development Corporation, which contributed $30 million, and the International Finance Corporation, which provided $100 million.

While some analysts see this as a good performance for a first transaction, it reflects a decline in investor enthusiasm. Despite the financial strength and a dynamic development plan, Axian Telecom received an interest rate of 7.35% for a repayment expected in 5 years (2027) and oversubscription of 2.2 times the desired amount.

Meanwhile, Liquid Telecom, another operator focused mainly on Africa, managed to raise the equivalent of $640 million on the international market at the end of February 2021, with an interest rate of 5.5% and a maturity of five years. The demand from investors had reached 5.5 times the amount initially requested.

Large groups based in developed countries also suffered the decline in investors’ interest in international debt securities issued by African telecom companies. The value of the Deutsche Telekom bond redeemable in October 2025 has fallen by 5.12% since June 2021 and that of the British Vodafone redeemable over the same year has fallen by 7.3%.

Investors targeting bonds issued in international financial markets seem to be preparing for a rise in interest rates. Many analysts are expecting this to come soon given the evolution of price indices in both the Eurozone economy and the US. Also, most telecom companies, whether in Africa or elsewhere, no longer necessarily borrow to develop the market and thus increase revenues. The resources mobilized are often mostly used to repay previous loans.