Africa Bonds

There aren’t many corporate insolvencies that would make a good movie. But any scriptwriters out there wanting to emulate the success of the Enron film should read our coverage of Afren this week.

Africa Finance Corporation, a pan-African multilateral development finance institution, has placed its inaugural MTN, following demand from a Southeast Asian buyer.

Ukraine’s sovereign debt restructuring, Argentinian primary elections and a potential Turkish coalition government are keeping debt bankers alert while the primary bond market takes its summer break.

Once the wild west of finance, emerging markets had dodginess and defaults aplenty. Now ethical investors want socially responsible investments. But if SRI criteria are too strict there will be nothing to buy, writes Steven Gilmore.

Zambia has printed its $1.25bn bond with a yield higher than any other outstanding African sovereign bond, as investors have this year punished the country for falling copper prices, a weak kwacha and a gaping budget deficit.

Those watching Zambia bonds might think that the $1.25bn deal this week yielding 9.375% demonstrates a borrower on the ropes considering in 2012 it paid a coupon of 5.375% for its debut bond. In fact, this is a borrower showing smarts when the rest of the CEEMEA gang appear to have bottled it.

Zambia has released price guidance of 9.25%-9.75% for an 11 year amortising bond, at a yield level that was the highest for a sub-Saharan African sovereign benchmark.

CEEMEA is refusing to put its feet up for the summer. Slovenia has reopened European sovereign supply, Zambia is prepping a dollar benchmark and rarer names are offering old school emerging market yields in the double digits.

Rating: Baa3/BBB-/BB+

The Republic of Zambia and Georgian firm Rustavi Azot kicked off roadshows this week, providing hope that a reopening of the CEEMEA sovereign and corporate markets — courtesy of Kazakhstan and Naspers — maintains momentum.

CEEMEA borrowers pounced on a clear window this week and paid for it with premiums as high as 50bp. But while everyone talks about the size of the concessions, it’s worth noting that issuers showed the maturity to accept them.

Naspers reopened the market for CEEMEA corporates this week. But the rare nature of the credit means that few other borrowers can get away with similarly modest — if historically slightly elevated — premiums, said bankers on the deal.