Investors hunting for yield are increasingly buying African sovereign debt. But demand for the infrequent issues has led to lower yields, making some market participants question whether investors are being compensated for the risk they take.

Demand for higher-yielding debt is opening up a new source of funding for some African countries, some of which are tapping the market for the first time. For investors, the debt sales offer exposure to growing economies, with a better return than they would receive in more-developed markets.