Written by Jake Bright | From Quartz

Is the honeymoon over for Africa’s debt markets? So said the Financial Times last week (paywall). It argued that the region’s economic boom is coming back to bite it as African governments that ran up large fiscal deficits are now feeling the pain of debt downgrades. That same week, Standard & Poor’s announced that “the heydays of bond offerings from newcomers or from frontier markets, like the African issuers” are over.

But the other way to look at it is that this is exactly what’s supposed to happen.

Certainly there’s been a boom in borrowing. Sub-Saharan Africa (SSA) has issued more sovereign dollar bonds in the past 15 months than the last four years combined. In 2013 and the first quarter of this year, SSA countries issued $8.1 billion in dollar-denominated eurobonds. For bonds announced as well as issued, the figure is $10.9 billion, including Kenya’s maiden launch, anticipated in August.

In fact, you might already be holding SSA bonds in your investment portfolio. Big institutional investors like PIMCO and Fidelity have been increasingly buying them, attracted to higher yields, improved sovereign risk profiles, and a new regional asset class to diversify their portfolios.

Perhaps even more important than what the bonds offer investors, though, is the possibilities they create for the countries that issue them.

Though SSA has been making headlines as the world’s fastest growing region after emerging Asia, much of the earlier two-decade wave that became the globalization of finance passed it by. The entire continent has 29 stock markets, but most of them have under 40 total listings. Before 2011, South Africa aside, SSA’s total stock market capitalization was less than $100 billion, around double that of Starbucks today. Africa’s local-currency domestic bond markets are still nascent.

Connecting to global bond markets gives African governments, which are struggling to deliver infrastructure to match their economic growth and emerging middle classes, a source of financing that isn’t private loans or foreign aid. Nigeria is funding greater electricity output with its $1.5 billion issuances. Kenya will use its 2014 eurobond money to upgrade power, roads, and seaports. Zambia plans to spend on improved healthcare and railways.

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