Africa Bonds

Renaissance Capital has appointed Robert Lamprecht as chief executive officer of Renaissance Capital in South Africa.

Sukuk is one of the fastest growing markets in the Islamic finance sector. In this second part of our Islamic Finance Basics series, we look at the underlying principles of sukuk, its development as an asset class and how it compares to conventional instruments.

The International Islamic Liquidity Management Corporation (IILM) will auction its third $490m short term dollar sukuk next week.

The average size of an emerging market bond in the first weeks of this year has leapt skywards compared to previous years while the number of deals priced has plummeted, according to Dealogic data. This may be a function of sovereigns having so far dominated the market — especially in CEEMEA — but is a trend that could be the shape of things to come for the rest of the year.

In 2013, several CEEMEA issuers roadshowed, mandated or even released price talk for a new Eurobond before postponing the deal. EuroWeek Emerging Markets recaps the borrowers that may be waiting for a window, and finds out whether they are still looking or have embarked on another funding plan.

Prospective international sukuk debutante Morocco is pushing ahead with plans to introduce Islamic banking for the first time, with parliament set to take a vote on the government’s draft bill as early as April.

Reports on Tuesday that Tanzania has postponed its debut Eurobond until the next fiscal year because of a delay in getting a risk assessment from Citi have been denied by bankers in London both at Citi and away from the bank.

Retail investors drove a long four year bond from African Bank to success on Monday, with the South African financial appealing to a market that has suffered scarce supply from high yielding credits in 2014.

Total EM volumes are only marginally down on last year to date, at $71.3bn, despite secondary trading levels having been rocked by an emerging markets sell off over the last fortnight. The total volume of new EM paper sold is only $36bn lower than at this point in 2013, according to Dealogic data.

South African lender African Bank opened books on a long four year Swiss franc deal on Monday morning, becoming the first African issuer to borrow in the currency this year.

Prospects of a sukuk from Tunisia are looking up after the country said it plans to issue dollar denominated bonds and sovereign sukuk with guarantees by America, Japan and the Islamic Development Bank (IsDB), in the first half of 2014.

Sukuk’s advantageous pricing for borrowers over conventional bonds in recent years has evaporated in the Gulf – leaving only disadvantageous structuring costs in the Islamic market – but it does not follow that sukuk volumes are going to disappear too. Far from changing tack to bonds, for those who can issue both the rationale to favour sukuk is stronger than ever.