The Editorial Team |

Emerging-Market Slump Shows IMF Reserves Endorsement Little Help

LAGOS (Capital Markets in Africa) – Ever since Thailand ushered in the Asian financial crisis by burning through its foreign-exchange reserves, those stockpiles have served as a gauge of resilience when turmoil erupts. This time round, the measure is looking shaky. Sure, there’s good correlation between the relatively low holdings in Argentina and Turkey and the slide in their assets. But India has the worst-performing exchange rate in Asia so far this year, and it has…

South Africa Mines Output Shrinks Most in Two Years in March

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JOHANNESBURG (Capital Markets in Africa) – Mining output in South Africa, the world’s biggest platinum producer, contracted the most in two years in March. Production shrank 8.4 percent from a year earlier, Pretoria-based Statistics South Africa said in a statement Thursday. That’s the biggest contraction since March 2016 and compares with a revised 2 percent expansion in February, it said. The median estimate in a Bloomberg survey was for a 0.2 percent increase. Platinum output…

Sibanye’s Takeover of Lonmin May Fall Through, Liberum Says

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JOHANNESBURG (Capital Markets in Africa) – Sibanye Gold Ltd.’s deal to buy Lonmin Plc is at risk of falling apart as the struggling South African platinum miner burns through cash, according to Liberum Capital Ltd. One of the conditions of the deal is that Lonmin is net cash positive, but because of low metals prices and the strength of the rand, the company is burning through cash, said analysts in a note on Monday. “At…

High Africa Yields Raise Debt-Service Concern, AfDB Says

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LAGOS (Capital Markets in Africa) – Some African countries are overpaying for dollar bonds, raising concern about debt-service costs at a time when currencies are weakening against the greenback, according to the African Development Bank. High-interest rates make the continent’s bonds attractive to investors despite questions about the true extent of the debt loads of countries such as Zambia and the Republic of Congo. “Raising a 30-year bond at a yield of 950 basis points — that’s…

Foreigners Can’t Resist South African Debt. That’s a Problem

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JOHANNESBURG (Capital Markets in Africa) – Foreign investors just can’t resist South African bonds — that should worry policy makers in Africa’s most-industrialized economy. Non-resident holdings of the country’s debt climbed to 43 percent in March from 41 percent at the end of December, according to National Treasury data. That’s almost double the emerging-market average, according to Goldman Sachs Group Inc. figures. When it comes to fixed-rate securities, which constitute 82 percent of South Africa’s 1.76 trillion rand ($140 billion)…

Moody’s Says Nigeria May Keep Several Naira Rates Until 2020

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LAGOS (Capital Markets in Africa) – Nigeria will probably maintain its system of multiple exchange rates, which the International Monetary Fund has long-urged it to scrap, until at least early 2020, according to Moody’s Investors Service. Merging the naira’s various rates any sooner might force the government to weaken the currency and raise fuel prices, which would accelerate inflation, the ratings company said. Nigerian monetary and fiscal authorities are likely to wait until investments in oil…

Iran Crisis Warps OPEC Equation as Saudis Signal More Supply

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LAGOS (Capital Markets in Africa) – The international nuclear agreement with Iran might not be the only deal U.S. President Donald Trump has unraveled. On Monday, Saudi Arabian Energy Minister Khalid Al-Falih was repeating his mantra that production cuts by OPEC and its allies must keep going. Within 48 hours, the kingdom had raised the prospect of increasing output. Between the two pronouncements came Trump’s decision to scrap the Iran deal, re-imposing sanctions on the world’s fifth-biggest oil exporter. “There…

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