The Editorial Team |

South Africa Is About to Find Out the Cost of a Junk Downgrade

JOHANNESBURG (Capital Markets in Africa) — Africa’s most industrialized nation is waiting to discover the cost of being downgraded to junk. South Africa lost its last investment-level rating late on Friday when Moody’s Investors Service downgraded it to Ba1, citing a weak economy and an unreliable power sector. When markets re-opened on Monday in Asia, the effect was immediate. The rand fell to a record low, weakening beyond 18 per dollar for the first time. The…

Fitch Downgrades 3 Nigerian Banks to ‘B’, Places All 10 Banks on

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LAGOS (Capital Markets in Africa) – Fitch Ratings has downgraded the three-highest rated banks in Nigeria, Zenith Bank (Zenith), Guaranty Trust Bank (GTB) and United Bank for Africa (UBA), to Long-Term Issuer Default Rating (IDR) ‘B’ and Viability Rating (VR) ‘b’. Fitch has also placed the Long-Term IDRs, VRs and National Ratings of all 10 rated Nigerian banks (excluding Stanbic IBTC Holdings (SIBTCH) and Stanbic IBTC Bank (SIBTC) – which are not assigned VRs and…

Thousands of Bankers Get a Break as HSBC, Lloyds Vow No Cuts

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LONDON (Capital Markets in Africa) — Thousands of bankers are set for a reprieve as European lenders reconsider their restructuring plans because of the widespread impact of the coronavirus. HSBC Holdings Plc is putting on hold as many as 35,000 job cuts while Lloyds Banking Group Plc halted its plans to trim around 780 positions. Credit Suisse Group AG Chief Executive Officer Thomas Gottstein said that the Swiss bank won’t announce any layoffs because of the virus, while Commerzbank AG and Societe Generale SA may slow the…

Fed Set to Launch Multitrillion Dollar Helicopter Credit Drop

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LAGOS (Capital Markets in Africa) — Call it Helicopter Credit. The Federal Reserve is poised to spray trillions of dollars into the U.S. economy once a massive aid package to fight the coronavirus and its aftershocks are signed into law. These actions are unprecedented, going beyond anything it did during the 2008 financial crisis in a sign of the extraordinary challenge facing the nation. “The Fed has effectively shifted from lender of last resort for…

Traders Trapped in Frontier Bonds Ramp Up Currency Shorts

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LAGOS (Capital Markets in Africa) — Investors trapped in some of the world’s most illiquid bond markets are rushing to short local currencies, driving up the price of hedging their positions. The implied yield on three-month non-deliverable forward contracts — or the cost of borrowing the local currency now in order to sell it in the future — has jumped threefold for Ukraine’s hryvnia this month, more than doubled for the Nigerian naira since mid-February,…

Fitch Ratings: Coronavirus Will Put Pressure on Sub-Sovereign Finances

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Fitch Ratings-Paris/London-25 March 2020: The coronavirus pandemic will put pressure on sub-sovereign issuers’ financial profiles, Fitch Ratings says. The main transmission channel to sub-sovereign ratings would be through potential sovereign rating actions rather than the direct impact, but this will vary between local and regional governments (LRGs) and government-related entities (GREs). Fitch rates approximately 300 LRGs and 325 policy-driven GREs globally on its international rating scale. Policy-driven GREs are those whose policy missions are traditionally…

WHO Issues a Rare Public Scolding, Saying Countries Wasting Time

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LAGOS (Capital Markets in Africa) — Governments should stop wasting precious time needed to fight the coronavirus after squandering an opportunity to prevent the Covid-19 pandemic, the World Health Organization’s head said. “We squandered the first window of opportunity,” said WHO Director-General Tedros Adhanom Ghebreyesus. “The time to act was actually more than a month ago or two months ago.” The WHO chief gave a rare, blunt admonishment Wednesday on the world’s progress against the…

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