The Markets

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…

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,…

LAGOS (Capital Markets in Africa)  — Nigeria will probably need to weaken the naira further following its devaluation last week, even as the central bank bucked global trends by holding interest rates on Tuesday to support the currency. With the decision to keep its benchmark rate at 13.5%, the central bank aims to avoid putting further pressure on the local unit after devaluing the exchange rate used by foreign bond and stock investors, which had…

LAGOS (Capital Markets in Africa) — U.S. stocks looked to post their first back-to-back gain since the coronavirus crisis began as investors awaited details on unprecedented government spending packages aimed at countering the hit from the pandemic. Treasuries advanced. The S&P 500 Index extended gains following Tuesday’s 9.4% surge in anticipation of the deal between the White House and Congress. After overnight negotiations, the bill is slated for a vote Wednesday. Boeing Co. rallied, lifting…

LONDON (Capital Markets in Africa)-  Hedge fund Chenavari Investment Managers has extended its gains this year to as much as 94% thanks to bets on credit-market volatility during the coronavirus pandemic. The firm’s $400 million Dynamic Credit Cycle Fund achieved the gains through March 16 after having already made 70% by March 12, according to a note sent to investors and seen by Bloomberg. Its strategy for the past two years has been to seek to benefit…

LAGOS (Capital Markets in Africa) – Four years after Nigeria tried and failed to stop its currency from collapsing, Africa’s biggest crude producer is again reacting to this oil crisis the same way it did in the recent past. It worked out badly then as oil revenues, which account for 90% of foreign-exchange earnings, failed to rebound in time — leading to a depletion in the central bank’s firepower to defend the naira. It will…

JOHANNESBURG (Capital Markets in Africa) – South Africa’s biggest labor organization and the nation’s main business lobby are pushing the government to find a way to utilize an unemployment fund with assets of about $11 billion to fight the effects of the coronavirus outbreak. The Congress of South African Trade Unions and Business Unity South Africa, or Busa, told the government at a meeting on Monday that it must find ways to use the Unemployment Insurance…