Investec Targeting Senior Private and Illiquid Credit in South Africa When Sentiment Sours
Bonds & Loans
Published: 5 February 2019 01:15
The long-term investment potential in South Africa and the continent as a whole remains vast, but African fixed-income remains vulnerable to global factors, which forces investors to limit their exposure to asset classes that can withstand tumultuous periods, says Simon Howie, Co-Head of SA and Africa Fixed Income at Investec Asset Management, in an interview with Bonds & Loans.
Bonds & Loans: How would you asses the credit outlook currently?
Simon Howie: The backdrop is largely positive with improving African sovereign fundamentals due to reduced structural deficits supported by a better external environment. But we remain cautious as this is off a low base and the US market is showing all the signs of being late cycle. At the moment we are seeing a seller’s market take hold, as low growth allows for limited new issuance, while liquidity remains high.
Bonds & Loans: Can you give us a sense of what kind of deals you are on the lookout for?
Simon Howie: Within our Africa credit strategies our preference is for private and illiquid credit across infrastructure, real estate and property. Secured private credit is more defensive than the listed market that is vulnerable to a sell-off. We are also targeting leading financials (bank and non-bank) in each region.
Bonds & Loans: What do you see as the major risks threatening the key markets you invest in at present?
Simon Howie: The macro backdrop across Africa is improving, but remains vulnerable to volatility in global markets. This could affect pricing, but refinancing risk is not a major cause for concern in the short term given the maturity profile which is modest for the next 3 years.
Bonds & Loans: Are there any plans to launch any new products / new funds in the near term? If so, what are they and what are some of the drivers for the move?
Simon Howie: We are currently raising new funds focussed on senior Africa private and illiquid credit, as this asset class remains compelling through the cycle, it is not dependant on an expansionary environment. Our new funds do have the ability to invest in listed market as they show value at various points in the cycle.
Simon Howie is a co-head of SA & Africa Fixed Income and is responsible for the SA and Africa Credit team at Investec Asset Management. He joined in 2005 when he was tasked with building its credit business and capabilities. Investec Asset Management now holds a leading position in managing diverse institutional credit portfolios, including both the listed and unlisted markets. Simon was previously with Investec Bank where he was responsible for debt origination (including corporate bonds, structured credit and securitisation) and was involved in the Southern African debt capital markets from its infancy in the late 1990s.
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24 Apr 2019