Fixed income |

Next Leg of Emerging-Bond Rally About to Start as Rate Cuts Loom

LAGOS (Capital Markets in Africa) – The bond rally across emerging markets may get fresh legs. Pressure is growing on central banks in developing nations to cut interest rates more aggressively as inflation eases and the Federal Reserve takes a gradual approach to policy change. That’s reducing the need for the high borrowing costs that deter capital outflows and protect emerging-market currencies. Looser monetary policy is a potential boon to already surging sovereign and corporate bonds in emerging…

Kenya Bond Rally Fueled by Investors Who Are Out of Options

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NAIROBI (Capital Markets in Africa) – Kenya’s best bond rally in at least five years has less to do with faith in the sovereign than finding a place to hide. An index of the government’s local-currency debt has advanced for 68 straight days, the longest run since Bloomberg began tracking the data in 2012, as an increase in non-performing loans and high charges on investments by insurance companies outside of government debt boost demand for the bonds….

Analysts Eye South Africa Rate, Even If No Change Seen: Street Wrap

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JOHANNESBURG (Capital Markets in Africa) – South Africa’s Reserve Bank faces a tricky interest-rate decision on Thursday. The nation’s economy unexpectedly fell into recession in the first quarter. Combating the slump with looser monetary policy may fan inflation, which slowed to within the central bank’s 3 percent to 6 percent target in April for the first time in eight months. It would also be problematic for international investors, given that the rand already has one of the worst…

African market outlook for 2017: Opportunities and challenges

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LAGOS (Capital Markets in Africa) – The global risk backdrop has been relatively supportive for emerging market (EM) FX and fixed income in early January 2017, as investors downplayed previous concerns about fiscal stimulus in the US under a Trump administration. This has underpinned the South African rand and local bonds and reinforced a receiving bias in swaps. However, there is a risk that upward pressure on UST yields and a bull USD cycle may…

African Sovereign Eurobonds: Recap and Prospects in 2017

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LAGOS (Capital Markets in Africa) – Eurobond issuance by African sovereigns was recorded at US$9.726 billion by four countries (South Africa, Ghana, Egypt, and Mozambique) in 2016 compare to US$6.750 billion issued by eight countries (Egypt, Ghana, Gabon, Ivory Coast, Namibia, Zambia, Cameroon, and Angola) in 2015. In April, the Republic of South Africa successfully priced and issued a US$1.25 billion 10-year Eurobond. The US dollar bond was priced at a coupon (interest rate) of 4.875 percent,…

INTO AFRICA February 2017 Edition: Africa’s Economic Path in 2017

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LAGOS, Nigeria, Capital Markets in Africa: Welcome to the 2017’s first edition of INTO AFRICA, the publication with fresh insight into Africa’s emerging capital markets. In this edition, we bring you a selection of insights on Africa’s economic prospects in 2017. Please download by clicking: INTO AFRICA PUBLICATION: FEBRUARY 2017 EDITION. The collapse of oil prices has had far-reaching effects on African economies in 2016. For commodity exporters, the implications are glaring – weaker revenues have…

African Issuers Scrutinized After Mozambique’s Bond Default

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LAGOS (Capital Markets in Africa) – After Mozambique’s default, investors are wondering who’s next in Africa. Bloomberg’s sovereign credit risk model — which uses data including budget deficits, foreign reserves, non-performing bank loans and political instability to calculate default probabilities — flags four candidates among African Eurobond issuers: Senegal, Tunisia, Ghana, and Zambia. Mozambique became the first African country to default on dollar bonds since Ivory Coast in 2011 when it failed to settle an almost $60 million…

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