Africa Bonds

While some cash-strapped borrowers in Africa will bite the bullet and pay up to access international bond markets in 2017, others will have to return to the loan market for support. Virginia Furness and Elly Whittaker report.

In this weekly round-up, the US Federal Reserve interest rate hike is pushing the RMB even lower against the dollar, a fresh batch of free trade zones could be approved for an early 2017 launch, and Tunisia’s central bank is looking at a Panda bond deal. Plus, a recap of our coverage.

Emerging markets bonds sold off after the US Federal Reserve indicated a more hawkish tone on Wednesday — but much like what happened after the Brexit result, spreads came off their wides quite quickly.

Nigeria’s sovereign bond prices have rallied with a new Eurobond expected in January despite the government reporting on Monday N2.2tr ($7bn) of unrecorded debt, equivalent to 2.3% of the country’s GDP.

South African gold miner Sibanye has agreed to buy US palladium miner Stillwater for $2.2bn and will raise a $2.7bn loan to pay for the acquisition. Sibanye joins South African borrowers Steinhoff and Aspen in raising large loans for M&A this year.

Tanzania has announced plans to issue a Eurobond in 2017/18 and will be hoping to put paid to the past with the new issue after its debut bond, a private placement, hit the headlines for all the wrong reasons last year.

Nigeria has picked three banks to manage its first sovereign trade since July 2013.

Nigeria has picked three banks to manage its first sovereign trade since July 2013.

Standard & Poor’s has surprised to the upside, revising Poland’s outlook to stable from negative while maintaining South Africa’s investment grade status last Friday. The latter decision prompted a 15bp-20bp rally in both South African sovereign and corporate debt.

Holders of South African assets face another nervous Friday waiting for a sovereign rating decision, this time from S&P.

South African assets were facing another week of uncertainty as reports emerged on Monday that ANC leaders were preparing a vote of no confidence against president Jacob Zuma and traders warned of the potential for a ratings downgrade on Friday.

Daily portfolio flows to emerging markets have fallen since the US election, with the seven day moving average declining to its the lowest level since August 2015, according to the Institute of International Finance.