Africa

Emerging market bond investors are reporting low secondary flows in a market dominated by new issues this week. And the mixed performance of those new deals is expected to weigh on investor appetite for this week’s trades.

Seplat Petroleum sold a $350m five year non-call two bond on Monday, turning down a larger trade that was available, according to a lead manager. The final print was being smaller than originally indicated.

The Arab Republic of Egypt has named four banks to manage its first euro-denominated bond sale.

Seplat Petroleum, a Nigerian oil and gas exploration and production company, was offering a 9% handle for its market debut on Monday.

The pipeline for euro-denominated African bonds is beginning to bulge, with Cote d’Ivoire announcing plans to follow Senegal to the market this week and Tunisia and Egypt preparing their own deals. But, as Virginia Furness reports, while large euro books show there is strong appetite for speculative grade supply, and is opening up a new funding channel for EM borrowers, the cost of funding in the currency versus dollars is unlikely to improve.

Combined books of $9.5bn enabled the Republic of Senegal to both print the tightest ever dollar 30 year dollar bond from a sub-Saharan African issuer (ex-South Africa), and to revise guidance by 50bp for its euro debut on Tuesday.

Emerging market bond markets began with a softer tone on Wednesday after the resignation of Gary Cohn as Donald Trump’s economic adviser added to a more negative tone in global markets. Cohn is a supporter of free trade and opposed Trump's leanings towards protectionism.

Price talk for Senegal’s new euro bond prompted fierce debate on Tuesday morning. Based on guidance, syndicate bankers away from the deal questioned the cost of the deal compared with a dollar issue, though the strong pricing result in euros may have put the debate to rest.

Standard Bank’s Kenya branch is looking to raise $100m in the loan market, ahead of a maturity coming up for one of its loans in October.

Republic of Senegal could well have timed to perfection its plans to issue a euro-denominated bond with EM investors calling this the “last chance” for EM borrowers to take advantage of extraordinarily low interest rates in the currency.

Eskom, the South African state electricity company, signed a R20bn ($1.7bn) syndicated loan on Wednesday, a day after S&P downgraded it.