Africa

Junk-rated South Africa has found some relief from its ballooning fiscal deficit through multilateral institutions, which are helping prop up its battered economy. Though the government has supported domestic lenders, there may yet be opportunities for them to enter international markets, some believe.

Emerging market bond issuance has staged a rapid and forceful comeback after the pummeling it took in March, but issuance from Sub-Saharan Africa has been noticeably absent. Bankers are now debating whether the fourth quarter will see supply from the region.

Credit analysts hope that European banks will be able to report much stronger capital levels in the second quarter, amid early signs that risk-weighted asset (RWA) volumes could be lower than expected.

Mozambique LNG, Africa’s largest project financing investment to date, has secured roughly $15bn of funding from a range of international lenders and credit agencies in one of the few sparks of emerging market loan activity this year. The deal shows there is still appetite for “overlooked” and lower-rated emerging market credits, bankers say.

Tunisia, one of the latest emerging market countries to fall into the grips of crisis, is facing myriad problems following its prime minister’s shock resignation this week. Though the government has approached sovereign creditors for debt relief, some say it may have more trouble obtaining payment holidays on its existing bonds, as the private sector debt relief debate for emerging markets brews.

Ghana Cocoa Board (Cocobod), which is in the market to refinance a one year $1.3bn loan facility signed in September, is facing troubles according to bankers on the deal, contrary to comments recently made by its chief executive.

Redefine Properties, the South African landlord, has completed a tender offer for all of its outstanding €117.2m bonds that are exchangeable into shares in RDI Reit, the London-listed real estate investment trust.

Pressure is mounting on private sector investors to join official institutions in granting debt relief to emerging market borrowers. An important point will be whether private investors agree to waive cross-default clauses for sovereign borrowers.

Redefine Properties, the South African real estate company focused on commercial properties, has completed a buy-back of its outstanding €117.2m 1.5% exchangeable bonds due 2021, as part of a wider restructuring of the firm.

The European Bank for Reconstruction and Development (EBRD) sold the first Algerian dinar-linked bond from a development finance institution last week. With local market liquidity drying up because of the collapse in the price of oil, further demand for dinar assets could depend on how well the nation’s economy diversifies away from the industry.

Wednesday evening proved a busy night for equity bock trades, despite wider sell-offs in secondary markets over fears of a second wave of Covid-19.

International bondholders have formed a specialist committee to conduct negotiations with Zambia after the country announced a liability management exercise to control its debt.