Fed raises policy rate by 25bp: Higher US policy rate lifts dollar and reprices EM hard‑currency duration

The Federal Reserve raised its policy rate by 25 basis points at the September FOMC meeting and published implementation notes and projections. The change lifts the US policy‑rate backdrop that anchors global yields. Mechanically, a higher US policy rate raises the discount rate applied to dollar‑denominated assets and tends to steepen US Treasury forward curves, which transmits into higher required yields for African Eurobonds through duration and liquidity premia.

Long‑dated SSA sovereigns and corporates bear greater yield sensitivity; countries with larger external amortisation schedules or weaker reserve buffers — where investors already price a refinancing premium — are most exposed. The dollar carry effect can also tighten capital for FX‑dependent borrowers, pressuring currencies that finance through foreign currency borrowing. For Africa, the move increases funding stress asymmetrically: higher oil prices (if any) would help exporters like Angola and Nigeria, but importers such as Kenya and Egypt face tighter external financing conditions.

Credits with ongoing IMF engagement or recent programme disbursements (Ghana) are relatively better insulated versus standalone credits without visible buffers. The desk will monitor subsequent moves in US Treasury tenors and dollar funding spreads; a sustained upward path in US term premia would amplify spread widening on long‑dated African Eurobonds and force re‑pricing of external debt curves.