Africa Bonds

The new bond issues may be flowing in emerging markets, but after weeks of volatility, the era of easy execution is over.

Emerging market investors were optimistic after Cyril Ramaphosa was voted in as president of South Africa on Thursday, following the long awaited resignation of Jacob Zuma, though the administration has its work cut out to revive the country’s anaemic economy.

The Federal Republic of Nigeria has released price guidance for its dual tranche bond that rival syndicate bankers and investors are calling “exceptionally” cheap.

Kenya will have its work cut out to reassure investors after Moody’s cut its credit rating by a notch on Tuesday. Rival bankers said the clash is poor planning, but the leads on Kenya’s upcoming roadshow said investors should be doing their own credit work, reopening the debate about the relevance of ratings agencies in emerging markets.

The Arab Republic of Egypt printed its $4bn triple tranche bond on Tuesday from a book that peaked at $12.5bn, despite another EM issuer — Russia's GTLK — having to postpone because of market volatility. A rival syndicate banker called the note cheap, but necessarily so.

The Arab Republic of Egypt is providing the first big test of the resilience of emerging market debt since last week's volatility with a triple tranche dollar bond. Bankers eyeing the trade say the book size, and amount of price revision, will be a real indicator of investor appetite for riskier EM debt now the shine has come off the market.

Kenya has mandated banks for its first Eurobond since 2014, and is looking to extend its curve by 24 years to join the handful of sub-Saharan African borrowers that have tapped the 30 year part of the curve.

Aviva Investors has brought in experienced analyst Carmen Altenkirch as a sovereign analyst on its emerging market debt team.

Emerging markets debt investor Ashmore saw $3.6bn of inflows in the quarter running up to the end of December last year, a sign that syndicate bankers are taking as further proof that the bull market has plenty of gas left in the tank.

Rating: Ba2/—/BB

Puma Energy made a strong start for non-financial corporate issuers on Monday, making full use of investor familiarity with the credit — and some excess cash — to make its $750m market return.

Puma Energy has returned to the debt markets to redeem its outstanding 2021s and in doing so will provide investors with a nice lump of cash to reinvest in a new offering of debt.