South Africa

Though the South African economy is struggling, its corporates are still sought-after in the international and the domestic bond and loan markets. But the risks of expanding businesses within Africa were highlighted last year by the $5.2bn fine on South African telecommunications company MTN. And as Basel III is introduced in the country, it will become more harder, or at least more expensive, to tap the loan market for maturities of five years or more. Meanwhile, the US rate rise will surely make the international bond markets more expensive for South African borrowers. At GlobalCapital’s roundtable, held in Cape Town on November 26, representatives from companies, banks and institutional investors gathered to discuss the changing environment for corporate issuers and investment in them.

South Africa’s economy is under siege from a host of challenges both global and domestic — and many of them beyond the country’s control. How can a country thrive when dire unemployment is combined with electricity shortages and a worsening drought, and when everything from Chinese growth to commodity prices and vulnerability to Federal Reserve interest rate rises seem to be conspiring against it? In an interview with GlobalCapital, the National Treasury presents a more positive narrative: of resilience, transformation and the promise of progress. South Africa intends to realise its potential.

South African issuers are rarely seen in international markets, but have traditionally received a warm welcome. Will that still be the case in 2016? Lucy Fitzgeorge-Parker reports.

The Republic of South Africa had a difficult end to 2015. Fitch cut the country’s credit rating one level on December 4 to BBB-, the lowest notch in investment grade, and in line with the assessment of S&P, which lowered its outlook to negative from stable on the same day. Just days later, President Jacob Zuma abruptly replaced his finance minister, Nhlanhla Nene, with David Van Rooyen and then a few days later — after strong local and international criticism — reappointed Pravin Gordhan. who had held the job between May 2009 and May 2014. The country’s growth has disappointed over the last year and is expected to continue to do so, as power shortages and job strikes take their toll. Meanwhile, the government’s decision not to tighten fiscal policy in the face of weakening revenue and rising debt levels has been heavily criticised, with Fitch naming it as one of factors behind the downgrade. At GlobalCapital’s roundtable, held in Cape Town on November 26, South Africa’s National Treasury, sub-sovereign issuers and leading bankers discussed how best to access the capital markets at this difficult point in time, and their outlook for the South African economy.

The world’s economy is yet to recover fully from the global financial crisis of 2008. Global recovery is uneven,

With foreign direct investment (FDI) commonly touching $20bn, a renewed focus on education and long overdue investment in the power sector, South Africa is clearly worth investing in. But there are plenty of challenges, not least the moribund domestic economy, electricity shortages, rising US rates, drought and a China slowdown. As a result, there will continue to be short term pain, but the outlook for the long term is brightening. Chris Wright reports.

Standard Chartered and Lonmin both begin new chapters in their stories today, with fresh capital from rights issues. In both cases the underwriting banks had to work for their fees, as the stories required explaining and each deal ended in a rump placement today.

Ethos Private Equity sold in a block trade on Tuesday night its last shares in Transaction Capital, the Johannesburg-listed commercial finance company.

Standard Chartered and Lonmin will each begin a new chapter in their stories on Friday, as results are published of their rights issues, books for which closed on Thursday.

Anglo American’s announcement this week that it will increase its asset sales target to $4bn, as part of a plan to adjust to painfully lower minerals prices, is the latest sign of two trends that are expected to drive M&A activity and equity capital markets business in 2016: carve-outs and divestments of assets; and the shake-up in natural resources.

South Africa is having rating trouble, and it looks serious. Since Friday, it is teetering on the edge of investment grade at both Standard & Poor’s and Fitch, a big problem for a country with a lot of infrastructure to build. But South Africa’s woes don't go too deep, and the country's growth could bounce back quickly.

Citigroup and Morgan Stanley have on Thursday night launched and closed the expected $2.5bn capital raising for Naspers, the South African media and e-commerce company, as an accelerated bookbuild. The sale is covered.