Africa Bonds

Nigerian corporate Seven Energy is returning to market with a seven year non-call three deal, which it had to abort in late July because of a downturn in the CEEMEA market. But new commitments from two public sector entities means Seven is in a stronger position than before, which bodes well for a deal that a pack of prospective Africa corporate borrowers will be watching carefully, said bankers on the deal.

The Republic of South Africa printed a debut sukuk this week, which represented a tightly priced first foray into a new investor base for the issuer and a benchmark for the country’s corporates to follow, said bankers on the deal. But their counterparts away from the transaction questioned the claims of tight pricing and pointed to what they saw as a sour performance in the secondary market.

A fresh wave of sukuk this week made September the biggest month ever for international sales of the product. But debut deals from Goldman Sachs and the Republic of South Africa have implications that go far beyond issuance records. These landmark transactions have paved the way for Western firms and African issuers to add their names to the expanding market.

The Republic of South Africa printed a debut sukuk this week, which represented a tightly priced first foray into a new investor base for the issuer and a benchmark for the country’s corporates to follow, said bankers on the deal. But their counterparts away from the transaction questioned the claims of tight pricing and pointed to what they saw as a sour performance in the secondary market.

South Africa printed the continent’s first international sukuk deal on Wednesday, offering a valuable benchmark for South African corporates, state-owned enterprises and other African sovereigns. South African SOEs like Eskom are among the borrowers considering sukuk as a new funding tool, but SOEs need the South African authorities to amend its tax policy in order to pave the way for follow on sukuk.

South Africa is set to price a $500m debut sukuk to yield 3.9% on Wednesday afternoon — a landmark deal in a continent enjoying an influx of Islamic money. But as with other inaugural sukuk offerings there was no hint of consensus over the sukuk’s concession to the conventional curve.

In the CEEMEA bond market the star product of the week is sukuk with South Africa, Luxembourg and Goldman Sachs all working on deals.

South Africa priced a $500m debut sukuk to yield 3.9% on Wednesday afternoon — a landmark deal in a continent enjoying an influx of Islamic money. But as with other inaugural sukuk offerings there was no hint of consensus over the sukuk’s concession to the conventional curve.

The Republic of South Africa started execution on its first ever sukuk on Tuesday. Debt bankers away from the bond saw the starting point 30bp back of the sovereign's conventional curve. But syndicate officials on the deal said the sukuk had started 20bp wide of where a conventional note in the same tenor would be priced.

The South Africa sukuk might well go fine, but that doesn’t mean it was a good idea. The country is in no position to pay away basis points for spurious long term diversification benefits, and has no ambition to build a domestic Islamic finance market.

The South Africa sukuk might well go fine, but that doesn’t mean it was a good idea. The country is in no position to pay away basis points for spurious long term diversification benefits, and has no ambition to build a domestic Islamic finance market.

The Republic of South Africa started execution on its first ever sukuk on Tuesday. Debt bankers away from the bond saw the starting point 30bp back of the sovereign's conventional curve. But syndicate officials on the deal said the sukuk had started 20bp wide of where a conventional note in the same tenor would be priced.