Africa bond: special focus
Euromoney's latest coverage of the bond markets in Africa.
Risk experts are becoming more concerned by the fact sub-Saharan borrowers are incurring liabilities again.
Africa has long had a fraught relationship with the capital markets – can the continent put that difficult history behind it and, crucially, fund the next stage of its development?
With global liquidity conditions tightening, local currency bond markets have a more important role to play in financing African governments and companies. While Ghana and Nigeria are leading the way, other markets are still in the early stages. Poor transparency and liquidity, and a multiplicity of legal regimes are holding back foreign investment.
Oil prices and currency controls created opportunities for some banks, which reported bumper gains from FX and fixed income last year, but no one is expecting a repeat of that. Can lending keep them sweet?
Now Mugabe is gone, one of the poorest nations in southern Africa can see the first signs of interest from international investors, but a chaotic currency regime, heavily indebted economy and looming elections are turning initial euphoria into cautious optimism.
While most countries have adopted e-wallets and mobile banking as a result of technological innovation and evolution, Zimbabwe was forced into it because of a financial crisis.
The sovereign has recorded one of the largest improvements of any sub-Saharan borrower this year in Euromoney’s country risk survey – the recovering oil market, contract certainty and plans to expand the extractive industry explain why.
Arunma Oteh has helped develop new financial tools to address the world’s most pressing issues – in an exclusive interview, she talks about the difference the capital markets can make and her previous career fighting corruption in Nigeria.
Following Mozambique's default, is it time to reassess which other African Eurobond issuers might follow suit – and what options are open to issuers – given deteriorating finances and rising global interest rates?
As shattered communities work to rebuild in the wake of the devastation caused by Hurricane Irma in the Caribbean, discussion of climate change finance is more relevant than ever. The challenge of equipping the developing world to cope with climate change led in 2015 to the founding of the Vulnerable Twenty (V20) group of nations, a body that has now expanded to 43 countries. Euromoney's coverage of the V20 and the broader topic of climate finance spans six continents and explores what is the ultimate example of the tension between micro and macro, where the most local of stories can be a crucial step to finding a solution to the global challenge of climate change.
It is rare for financial market professionals to feel they are helping to save the world, but a new capital markets deal from the World Bank to help the poorest countries cope with pandemics might be doing just that.
As international banks continue to pull out of Africa, Afreximbank president, Benedict Oramah explains why African institutions need to be the main source of support for the continent in times of crisis.
The country’s last administration borrowed heavily from banks to sustain inefficient state-owned energy companies at the expense of the private sector – can the newly elected government repay the debt and get banks lending again?
The country’s finances are in such a parlous state that it must treat the IMF and bondholders with all due respect to get the result it needs.
The country has disappointed investors by revealing undisclosed liabilities, which is underlining how African borrowers must be treated with caution.
Country deems debt unsustainable; IMF support may be imminent.
They might not like to admit it, but the decline in commodities prices could be just the impetus that the regions’ investment banks, and their capital markets, need.
Euromoney’s country risk survey shows the safety of sub-Saharan Africa (SSA) issuers is once again in question, as economies flounder, debts spiral and capital access tightens.
First there was M-Pesa, Kenya’s innovative and highly popular text-banking service that turned mobile phones into mobile ATMs, transferring money by SMS.
The government insists that its banking sector will remain closed to external investment. But can the country’s economy thrive without better access to international credit?
Investors snapped up Angola’s $1.5 billion Eurobond debut this month, and yet the sovereign borrower’s country-risk score has plunged, putting it among the world’s worst default risks.
Highest mark of any African Eurobond in 2015; debt sustainability questions linger.
Armando Manuel, Angola’s finance minister, says that Angola will still issue a Eurobond despite recurring delays.
"Bonds issued in kwanza indexed to the dollar are an asset that has been on the rise over the last couple of years."
Emerging-market turmoil stemming from a raft of global issues has dented bond issuance from Latin America to emerging Asia. Africa has been hit hard too, though the picture here is a mixture of good and bad.
One of the aims of the exchange is to provide a modern platform for trading bonds and stocks that meets international standards, says Pedro Pitta Groz, CEO of Bolsa de Dívida e Valores de Angola (Bodiva).
Access Bank has become the second bank in Nigeria to receive a rating from Moody’s, illustrating the bank’s strengths despite challenging macroeconomic conditions.
As Ghana prepares to return to the Eurobond market, bankers say the sovereign’s debt sustainability will be tested, amid weak real-money appetite for frontier economies.
With expanding economies and hundreds of million Muslims, Africa deserves to be a bigger part of Islamic finance. After a slow start, there are signs the sector is beginning to gain the crucial mass and legislative backing it needs.
Investors and issuers think alternative energy might soothe the bruises left by the failure of African Bank.
Helping to demonstrate the role that Islamic finance can play in Africa, which was one of the themes of the year.
Africa Finance Corporation's (AFC) debut bond is buoyed by positive investor sentiment towards sub-Saharan Africa's (SSA) largest economy.
The Brics sovereign is still worrying the risk experts – and its downgrades seem likely to continue.
Risk experts have become increasingly concerned about prospects for the majority of African sovereign borrowers that are considering issuance in 2015. Will investors demand a premium?
Cote d’Ivoire’s latest Eurobond and the first out of sub-Saharan Africa this year indicates investor appetite for African sovereign debt and the country’s strong fundamentals.
Ghana has been in discussions with the IMF since September over a new programme, but the March deadline is likely to be missed as the administration seeks to resist pre-election giveaways and cut the public-sector wage bill, say analysts.
Angola could become the first African sovereign bond borrower since the great oil price crash this year in a debut deal that will set the tone for frontier-market debt.
African Eurobonds suffer as commodity prices slump January 2015 African capital markets have been driven by a boom in Eurobond issue during the past two years, but supply and demand has come under fire after plummeting oil and commodity prices.
Illiquid markets, limited exchanges and sometimes vague institutional information make Africa’s securities landscape difficult to navigate. Firms such as Imara are in a good place to act as guides. Angola sets sights on capital-markets reform
The development of Angola's capital markets has been long promised but recent indications from the country's capital-markets commission suggests secondary public-debt trading could begin as early as next month. Nevertheless, it's unclear when the stock exchange will open its doors.
Kenya’s top-tier corporates and financial institutions are primed to follow hot on the heels of the sovereign’s Eurobond issue. But the volume is likely to be modest relative to Nigeria.
South Africa issued its long-awaited debut sukuk on Wednesday in a bid to diversify away from conventional means of fundraising and attract investors in growth markets in the Middle East and Asia.
Sub-Saharan Africa’s capital markets continue to make up a tiny proportion of overall global investment banking activity. Investment banking fees for the region in the first eight months of the year totalled less than $200 million, a fraction of a global fee pool of close to $60 billion, according to data from Thomson Reuters.
Bankers are hoping the avalanche of low-fee African sovereign Eurobond deals will provide a gateway to more-remunerative business, says Helmut Engelbrecht, head of investment banking in Africa for Standard Bank.
Senegal should focus on diversifying funding channels rather than marketing itself as an Islamic finance hub, which could limit investor interest.
The country is forging ahead in its aim of becoming a regional Islamic finance hub, issuing its debut sukuk in July. However, questions remain as to exactly how dedicated it is to reaching this goal.
Cote d’Ivoire’s return to the Eurobond market with a $750 million deal, three years after default, saw huge demand and priced within Kenya’s debut issue just a month ago.
Although terrorist attacks raged in Kenya at the beginning of the week, the country’s first Eurobond and the largest in the continent excluding South Africa was received well, highlighting sustained demand for emerging market debt.
The African Development Bank’s Africa50 fund aims to attract institutional investors to commercially viable infrastructure projects in the continent, but there is still a huge gap to fill, say infrastructure experts.
During a discussion on capital market development at the annual meeting of the African Development Bank in Rwanda, panellists argued sovereign sukuk issuance will finally take off this year in a bid to diversify sources of long-term dollar financing away from the Eurobond market.
The Rwanda debt market has been given a boost after the successful issue of the International Finance Corporation’s first bond in Rwandan francs, but regulators face an uphill battle to nurture the fledgling bond market.
Fears that African states have over-indulged in sovereign issuance are exaggerated.
The country has new wealth thanks to some big natural resource discoveries. They spell opportunity for both foreign and local institutions. How does such a small economy cope with such big demands?
The case against African sovereign bond issuance – from a moral and debt-servicing perspective – is too bearish but local FX depreciation represents a risk.
Gaining diversified access to the African growth story can be difficult when local capital markets are limited and illiquid. Private equity should help fill the gaps.
Ghana's currency and Eurobond yields took a big hit last week as markets continued to take fright over its twin deficits. Here's the sorry tale in pictures.
Rising risk scores since 2013 are providing investors with encouragement that the worst is over for the troubled region. Yet sovereign risk remains heightened in familiar territories, with the Syrian turmoil persisting, leaving Gulf states and Israel as relative oases of safety.
African countries’ ability to access diversified funding is becoming more important. Deepening the local-currency bond markets is essential, but is the price worth paying? And are development organizations doing enough?
Zambian policymakers are poised to tap the international market for a second time, but they cannot expect similar terms set in the 2012 issue.
Fiscal slippage, less FDI and lower export prices make Ghana among most vulnerable; Eurobond access still cheap.
A flurry of Eurobond issuance out of Africa was characterized by cheap funding as portfolio funds flooded Africa looking for yields, but as Fed tapering comes to the fore, African sovereigns might tilt back towards local currency bond markets.
Fed tapering will prompt rises in yields for African hard-currency debt, but this doesn’t mean that countries with strong economic fundamentals should hold off issuing.
Many Rwandans questioned the need for the country’s inaugural Eurobond. Initial plans were derailed by the UN. But its successful performance has encouraged policymakers to deepen the country’s capital markets and create a unique business platform.
Although Kenya missed out on low nominal yields for emerging market issuance before the May to August rout, the country will not pay through the nose for credit-specific risk, despite the recent terrorist atrocities at Westgate Mall, its twin deficits and large size of the deal at $1.5 billion to $2 billion, say analysts. However, the country faces an uphill battle to issue before the Christmas holidays.
Federal Republic prices $1 billion bond; Ghana returns; banks working on Kenya debut.