Africa

Sappi, the South African pulp and paper company, decided just before lunchtime on Friday to cancel a €250m bond issue, judging the price it would have had to pay too high. The failure of this deal contrasts with the vigorous issuance by much riskier companies in the US market.

Emerging market borrowers are turning their noses up at the terms on offer in the loan market, which have become dearer during the coronavirus pandemic. Lenders say they are willing and ready to lend, but are not ready to concede on their terms, writes Mariam Meskin.

While emerging market bond investors are spending their days in the Covid-19 crisis battling with poor liquidity, cash calls from end investors, and even the odd new issue, debt relief has remained a threat, albeit only a vague one. But at policy level the topic is of growing importance, and what began as a matter for official institution creditors took a step closer to embroiling the private sector this week. Ross Lancaster, Phil Thornton and Oliver West report.

The African business unit of China Nonferrous Metal Mining (Group) Co, a mainland state-owned company, is tapping the offshore loan market for the first time, seeking $300m.

Banks providing reserve-based lending facilities to oil exploration companies are looking to sell these loans, usually held and refinanced as ultra-secure relationship products, at bargain basement prices.

South African bank Investec has chosen to extend the tenor of an existing loan instead of refinancing it, in an attempt to avoid paying the wider margins lenders are demanding as a result of the coronavirus pandemic.

With emerging markets across the globe facing an overwhelming liquidity squeeze, the IMF said on Thursday that it would “look for solutions that can unlock critical financing” in countries where the unsustainability of debt prevented the fund from lending, potentially increasing funding options for the most stressed of countries.

Nigeria, Africa's largest economy, is the latest emerging market to approach international financing institutions for help to deal with Covid-19.

More than 100 charities and other organisations are urging that developing countries' debt payments be cancelled this year. They have called for interest and principal payments to be withheld from public and private sector lenders.

The number of year-to-date loans signed across CEEMEA more than halved compared to last year, which bankers said is a direct result of the coronavirus crisis that has engulfed countries and markets worldwide. The outlook for issuance is bleak, to the dismay of many lenders.

Turkey has joined the list of emerging market countries experimenting with quantitative easing programmes in the wake of the Covid-19 crisis engulfing conventional funding markets.

Moody’s downgraded South Africa on Friday, removing the battered sovereign’s final investment grade rating. Sentiment among investors and bankers was split, with some confident that borrowers will be able to lean on their relationship lenders if needed, and others worried about the economic hit which is heading the country’s way.