The Markets

ACCRA (Capital Markets in Africa) — Ghana is missing out on a rally of African bonds as investors fret about an expansion in spending and borrowing ahead of elections in December. The elevated borrowing to cover the spending shortfall has seen the country’s three-year and longer-dated local bond yields rise on the secondary market even as those of its peers on the continent are falling. This is likely to increase future cost of issuing new…

HARARE (Capital Markets in Africa) — Zimbabwe’s measures to stabilize the country’s currency is finally paying off: the local dollar is heading for back-to-back months of gains for the first time since it was re-introduced 18 months ago. This comes after the southern African nation’s central bank introduced weekly foreign-currency auctions and cracked down on mobile-money transactions, blamed by authorities for undermining the currency. The Zimbabwe dollar slumped to 83.39 per U.S. dollar on August 26 after…

LAGOS (Capital Markets in Africa) — This month’s emerging-market rally is showing signs of faltering as investors refrain from placing big bets in the final two weeks of the U.S. election campaign. Even as Democrat Joe Biden has widened his lead over President Donald Trump in recent polls, a Bank of America Corp. survey showed global fund managers expect the outcome to be contested and are ready for extreme market turbulence. While growing odds that Democrats will…

LAGOS (Capital Markets in Africa) — Bond investors are pouring money back into riskier debt in search of higher returns as Covid-19 flare-ups and clampdowns have money managers bracing for interest rates to remain low for a long time. Five of the six U.S. junk bonds that companies sold on Wednesday were increased in size to accommodate heavy demand, and yields ended up being lower than initially targeted on the deals. In the secondary market, notes…

LAGOS(Capital Markets in Africa) — Local investors are piling into Nigeria’s short-term debt even though rising inflation means that they are reaping negative real returns. Prices increases in Africa’s largest economy accelerated for a 13th straight month in September, according to data released by the statistics agency on Thursday. Even so, rates on Treasury Bills slipped to the lowest levels seen in more than 10 years at an auction on Wednesday. The one-year bill sold…

LONDON (Capital Markets in Africa) — The global derivatives market looks set to accelerate its exit from Libor with the impending release of standardized contractual terms designed to ease the transition to new rates. The International Swaps and Derivatives Association, the trade group for the industry, will publish its hotly anticipated Libor protocol on Oct. 23 after receiving approval from the U.S. Department of Justice, ISDA said in a statement on Friday. The publication “will effectively fire…

LAGOS (Capital Markets in Africa) – The January 2021 launch of fallbacks for derivatives contracts that reference Libor will still make it challenging for the industry to adopt new term rates referencing the Secured Overnight Financing Rate (SOFR) before Libor ceases to be quoted at end-2021, Fitch Ratings says. Development of a SOFR term reference rate relies on sufficient liquidity in the SOFR-based USD derivatives market, which remains thin compared to traded notionals for USD…