How is the current macro environment – rising interest rates, a global escalating trade war, and elevated regional sovereign debt – influencing East African markets? John Lentaigne, Chief Underwriting Officer at African Trade Insurance Agency, speaks with Bonds & Loans about the economic outlook in some of the region’s largest economies.
Eskom, South Africa’s scandal-plagued state-owned power utility, has embarked on an ambitious overhaul of its balance sheet, governance structure and approach to the markets as it looks to overcome allegations of corruption and mismanagement. Analysts are split on whether it will be enough.
As the debt capital markets continues to deepen in Nigeria and the fundamentals continue to stabilize, upcoming elections and simmering security threats look set to test investor and borrower conviction.
Since the turn of the century, two trends have notoriously characterised African economies: world-leading rates of growth and high external debt. East Africa has been at the forefront of this growth spurt, much of which came from the vast volumes of cheap dollar funding streaming into EMs from the low-yield environment in Western economies post-2008. But as the global EM sentiment turns sour and investors abandon riskier regions, those high levels of dollar credit are becoming unsustainable, and fostering growth of local debt markets is becoming increasingly urgent.
Bonds & Loans team arrived on the ground in Nigeria to meet with a broad range of local finance leaders in order to get a sense of the risks and opportunities on the horizon.
Mozambique’s recent default on bond obligations, due to copious amounts of hidden loans, was a shock for investors in the region, seen by many as a harbinger of more fiscal troubles on the horizon for Sub-Saharan Africa. Reports in the local press may indicate a familiar pattern emerging in Zambia – but for now, analysts are giving it the benefit of the doubt.
In advance of our Bonds, Loans & Sukuk Nigeria 2018 conference and forthcoming special report on the region, Bonds & Loans met with a broad range of local finance leaders in order to get a sense of the risks and opportunities on the horizon.
In advance of our Bonds, Loans & Sukuk East Africa 2018 conference and forthcoming special report on the region, Bonds & Loans visited the region to meet with a broad range of finance leaders in order to get a sense of the risks and opportunities on the horizon.
Will 2018 see more African corporates tap into the public debt market? Are green bonds, sukuk, and other alternative fixed income structures likely to grow in prominence across the continent this year? And will political reversals in some of the region’s largest economies be matched by deep reform? Bonds & Loans spoke with dozens of borrowers, investors, bankers and government representatives at Africa’s largest debt capital markets conference – Bonds, Loans & Sukuk Africa – to get a sense of the key trends likely to dominate the region’s credit markets over the coming year.
With fresh forecasts predicting a deceleration in the country’s economic contraction and borrowers making fresh strides in the local credit market, Nigeria is poised to make strong gains in 2018. Transforming those gains into longer-term sustainable growth will depend heavily on the country’s commitment to reforms, but with elections in the offing and oil prices rising, some analysts question its resolve for staying on the reform path.
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