Nigeria’s economy recorded better than expected private sector credit growth in the third quarter of this year, with more borrowers funnelling the proceeds towards CAPEX-related activities – despite next year’s federal election looming. We speak with Jan Friederich, a senior director at Fitch Ratings about lingering risks in the country.
With the October mini budget speech looming, South Africa’s economy and funding environment come sharply into focus; both remain in a precarious state. Analysts, investors, CFOs and Treasurers who spoke with Bonds & Loans on a recent research trip to the region emphasise that the way in which the macro environment evolves, and the way in which the government tackles key issues like land reform, will to a great extent dictate the country’s trajectory over the near, medium and long-term.
Bonds & Loans interviewed Jermaine Leonard, Director, Sovereign Ratings at Fitch Ratings, about the macro outlook for East Africa and the sustainability of its debt burden.
20 Sep 2018
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.
- SWOT Analysis: Nigeria, West Africa’s Largest Market
- SWOT Analysis: Kenya, East Africa’s Largest Market
- On the Ground, Off the Record in Africa: Public Debt Access, ESG, and Reform
- Upturn for Nigeria’s Debt Capital Markets Threated by Election Uncertainty, Rising Oil Price
- Zimbabwe Recovery Huge Boon for Foreign Banks, Credit Markets – If Regulators Can Pull Off Reforms
18 Oct 2018