Africa

There is growing concern among African policymakers that indebted low income countries face growing risks of downgrades and even default because of a lack of coordinated support from public and private institutions.

The coronavirus pandemic has ramped up African sovereigns’ need to spend, resulting in a wave of credit rating downgrades. But market participants are split over the perception of credit risk in the region and how that will affect future issuance.

The Arab Republic of Egypt — a frequent bond issuer — has signed its first syndicated loan. Egypt’s debut in the market, bankers said, is an attempt to diversify its funding to support an expanding state budget, just months after its debut green bond was delayed due to Covid-19. Mariam Meskin reports.

The Arab Republic of Egypt has secured its debut syndicated conventional and Islamic facility from a range of local and international lenders as it attempts to support the state budget, which has come under major pressure during the coronavirus crisis.

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South Africa’s Standard Bank is set to raise a syndicated loan by the end of the month, which, according to market sources, will be provided by Chinese banks. But bankers say the pipeline for syndicated loans in Africa and the Middle East remains nearly empty, as both lenders and borrowers continue to feel the impact of the Covid-19 pandemic.

The Nigerian National Petroleum Company has raised a financing package, backed by multilateral lenders, commercial banks and oil trading companies.

Prosus made a barnstorming debut outing in the European bond market after Monday’s dollar trade, with the ecommerce and investment company that straddles investment grade and emerging market investor interest seeing €13.5bn of demand for a €1bn deal.

Junk-rated South Africa has found some relief from its ballooning fiscal deficit through multilateral institutions, which are helping prop up its battered economy. Though the government has supported domestic lenders, there may yet be opportunities for them to enter international markets, some believe.

Emerging market bond issuance has staged a rapid and forceful comeback after the pummeling it took in March, but issuance from Sub-Saharan Africa has been noticeably absent. Bankers are now debating whether the fourth quarter will see supply from the region.