The Markets

JOHANNESBURG (Capital Markets in Africa) — South Africa must cut spending to avoid a sovereign debt crisis within the next four years, Finance Minister Tito Mboweni said. Mboweni is preparing to deliver a revised budget on June 24 that will reflect the devastation wrought on the economy by the coronavirus pandemic, he told lawmakers Thursday in Cape Town. The Treasury plans to make “very serious and unusual changes” to its expenditure plans, he said. “We…

LAGOS (Capital Markets in Africa) — Emerging-market stocks may be recovering, but cash-rich investors would be better off avoiding the risks that still abound in developing nations. Barclays Plc is telling its high net-worth clients in emerging markets to invest in U.S. equities instead, despite the S&P 500’s breakneck rally. Countries from India to Brazil and Russia have become the epicenter of the coronavirus pandemic, with their economies grinding to a halt and governments struggling to provide…

NEW YORK (Capital Markets in Africa) — Two drugmakers behind the industry’s most prominent responses to the Covid-19 pandemic are looking into the possibility of a combined future as economies emerge from lockdowns. AstraZeneca Plc, co-developer of one of the fastest-moving experimental coronavirus vaccines, has made a preliminary approach to Gilead Sciences Inc., maker of the only U.S.-approved treatment, according to people familiar with the matter. If they decided to pursue a merger, it would be…

JOHANNESBURG (Capital Markets in Africa) — South Africa’s antitrust-watchdog revived a five-year-old case against banks that were accused of manipulating trades in the rand-dollar currency-pair. The Competition Commission has compiled a new charge sheet against more than 20 lenders that allegedly colluded to fix prices and divide markets in the currency pair, mostly in New York, the regulator said in an email Tuesday. Nedbank Group, FirstRand Ltd.’s Rand Merchant Bank and Standard Bank Group’s Standard Americas Inc….

LAGOS (Capital Markets in Africa) — A debt-relief initiative for poor nations is losing momentum as credit premiums narrow and lenders balk at the complexities of a concerted halt in payments. Private creditors won’t rush to join a G-20 led the effort to ease debt burdens, while borrowers may also be wary of joining the plan as their economies heal after the coronavirus-led selloff, potentially improving market access for issuers. Defaults may still pick up…

LAGOS (Capital Markets in Africa) — In Africa’s biggest economy, the hunt for dollars could threaten the survival of many manufacturers, even when they have a lot of nairas. The Central Bank of Nigeria has been rationing foreign exchange in efforts to protect the local currency amid the crash in oil prices and coronavirus outbreak. It only resumed weekly dollar sales of $100 million for small businesses and expenses such as tuition late in April. That means…

LAGOS (Capital Markets in Africa) — Foreign investors in Nigeria trapped by the lack of dollar liquidity are reinvesting in short-term debt, driving down yields to new lows. Discount rates on the high-yielding instruments dropped to the lowest levels since April 2016 as investors with nowhere to go piled into them. The stop rate for one-year paper, also known as Open Market Operation bills, fell to 9.9% at a central bank auction on Thursday, the…