Africa Bonds

After a turbulent summer, South Africa swept in for its biggest ever bond issue on Thursday, taking $3bn with a dual tranche 12 and 30 year bond. The deal was a yield hunters dream and proved that investors are willing to put aside concerns of an impending downgrade, and political infighting, for a decent return.

South Africa has opened books on a dual tranche 2028 and 2046 dollar bond after a turbulent summer and while the generous starting price is likely to generate momentum in the book, fears of a downgrade overhang the transaction with one investor telling GlobalCapital he saw better value elsewhere.

The cheerful and businesslike mood in European equity capital markets, despite clear risks of volatility in the offing, was highlighted again today by the launch of a €2.5bn capital raising by Steinhoff, the South African retail group.

After a two year absence from the capital markets, two Nigerian corporate issuers are lining up to test investor demand for sub-Saharan Africa high yield credit.

Ghana has bought back $200m of its outstanding 8.5% 2017s — just half of the targeted $400m. Emerging markets investors were happy to hold the bonds to maturity, said one on Monday.

Emerging market bonds opened 10bp-15bp wider on Monday giving issuers plenty of reason to sit and digest a sell-off following a months-long positive run. However, bankers said that more attractive valuations would be a positive for investors.

Ghana stunned bond markets with a new six year dollar deal yielding 9.25% on Thursday, barely a month after abandoning issuance plans due to pricing concerns.

South African telecoms company MTN will start meeting investors this week ahead of a potential dollar bond market return.

Ghana took investors by surprise on Thursday morning with the release of pricing for a new global dollar bond.

Domestic opposition could derail Egypt’s IMF deal and threaten plans for a dollar market return, analysts have warned.

South Africa was thrown into financial uncertainty this week as its finance minister, Pravin Gordhan, became embroiled in a corruption probe by the country’s elite police unit, the Hawks. Volatility hit local currency bonds, which remain some 50bp wider, but the country’s sovereign curve is already recovering and in equities and loans it is business as usual. But some say this underplays the risk of investing in South African assets.

South African president Jacob Zuma has spoken out in support of the country's troubled finance minister, Pravin Gordhan, but this did little to reassure the market as volatility in local currency bonds and the rand extended into Thursday.