In the world of emerging and frontier markets, there is rarely a dull moment. But while countries like Venezuela or Argentina continue grabbing headlines, one country in southern Africa is starting to creep ever so slowly into the limelight – and it’s not Mozambique.
The African nation’s first international bond, a EUR500mn 7-year Eurobond, saw Bénin tap the market on the same day as neighbouring Ghana at a time when global investors, buoyed by the Fed’s dovish mood swing, piled into high yield sovereign debt.
Since coming to power in April 2018, Abiy Ahmed Ali has set Ethiopia upon a new path towards liberalisation. Seeking to temper the established model of state-led growth, Abiy has sought to boost the economy through massive investment in infrastructure and manufacturing, as well as a sweeping programme of privatisation. But so far these policies have yet to bear fruit, and the spectre of political instability threatens to stall the reform process.
A much-oversubscribed sovereign bond issued by the Republic of Egypt earlier this year reinforced a sense of optimism among emerging market investors about one of the region’s most promising economies, but analysts caution that the sustainability of the country’s improving macro, growth and investment outlook fundamentally hinges on deeper empowerment of the private sector and removal of the military from civilian industry.
In spite of its troubled past, Rwanda’s impressive post-civil war progress in opening up its markets and establishing a strong business-friendly governance mode have largely gone under the radar. That is starting to change, and its neighbours are beginning to take heed.
Nigeria’s Access Bank became the first corporate in the country to place green bonds in the public market, but will the move inspire other borrowers to tap into emergent pools of ESG-conscious liquidity? Greg Jobome, Executive Director of Risk Management at Access Bank and one of the key project managers for the Bank’s recent transaction seems to think it will, but more work needs to be done to help the bank’s own clients – current or prospective issuers themselves – in making the transition towards more sustainable business processes.
Absa Group’s recent inaugural USD400mn Tier II bond not only satiated its own capital requirements dictated by Basel III, but it also provided the dollar funding necessary for the bank’s future growth and created a benchmark for similar transactions across the continent.
Following a recent research trip to the region and conversations with bankers and investors on the ground, Bonds & Loans put together a summary of key strengths, weaknesses, opportunities and threats East African economies are set to face over the next 12 months.
With a potential credit downgrade in the offing, yawning fiscal gaps to fill, and an election on the horizon, South Africa has found itself at yet another critical junction, forcing government and state-owned companies to weigh short-term wins against long-term objectives. In advance of our Bonds, Loans & Sukuk event in Cape Town in March, we speak with Dr Frans Cronje, CEO of the South African Institute of Race Relations about the upcoming election, policy reform, and the role of financial innovation in transforming the country’s nascent and increasingly important services sector.
8 Mar 2019
Markets have hung their hopes on the upcoming 2019 election and the avoidance of a blowout at troubled state-owned utility Eskom as potential reasons for optimism in South Africa, but without a monumental shift in mindset, or an end to the factionalism that has increasingly defined the executive and the ANC, both reform and growth will remain elusive.
- Special Report: The Cost of Internet Shutdowns in Africa
- Investec Targeting Senior Private and Illiquid Credit in South Africa When Sentiment Sours
- Eurasia Group: Balance Between Diversification and Fiscal Consolidation Key for Southern Africa
- Duet Group: “Frontier Countries Growing in Spite of Governments, Not Because of Them”
- S&P Global: From Rwanda to South Africa, External Risks Trump Idiosyncratic Challenges
15 May 2019