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Zimbabwe looks to issue more ‘bond notes’ as cash shortages bite

12 July 2017 Comments (0) Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe’s Reserve Bank is looking to increase the amount of domestic “bond notes” in circulation beyond an initial $200 million cap, its governor said on Wednesday, as the economy continues to grapple with shortages of U.S. dollars.

“We are in the process of negotiating those facilities and then we’ll come back to yourselves after we have made significant progress,” John Mangudya told reporters on the sidelines of a lecture at the University of Zimbabwe.

He declined to give any more details of the new currency issuance plans.

 

(Reporting by MacDonald Dzirutwe; Editing by Ed Cropley)

 

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Nigeria to sell 140 bln naira bonds on June 21 – debt office

16 June 2017 Comments (0) Latest Updates from Reuters

LAGOS (Reuters) – Nigeria plans to auction 140 billion naira ($460 million) in bonds on June 21, the Debt Management Office said on Friday.

The debt office will sell 40 billion naira of bonds due in 2021 and 50 billion naira each of bonds due in 2027 and in 2037, using a Dutch auction system.

Settlement is expected the day after the sale. The bonds are re-openings of previous issues.

The central bank on Wednesday announced plans to sell 133.24 billion naira worth of Treasury bills at an auction next week.

Nigeria, which has Africa’s biggest economy, issues sovereign bonds each month to help fund its budget deficit, support the local debt market and maintain a benchmark for companies to follow.

The West African country expects a budget deficit of 2.36 trillion naira this year as it tries to spend its way out of a recession. It expects to raise money to cover more than half the deficit from the local market.

It has a series of debt issues lined up including a $300 million diaspora bond and a 100 billion naira debut domestic sukuk this month.

($1 = 304.68 naira)

 

(Reporting by Oludare Mayowa; editing by Alexis Akwagyiram)

 

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South Africa’s rand clings on to gains despite downgrade fallout

14 June 2017 Comments (0) Economy, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand edged firmer on Wednesday, clinging on to recent gains despite continued fallout triggered by a Moody’s ratings downgrade last week and an anticipated interest rate hike by the U.S. Federal Reserve.

At 0640 GMT, the rand traded 0.2 percent firmer at 12.7350 per dollar compared to close of 12.7600 overnight in New York, bringing weekly gains to around 1.3 percent.

Following a one notch downgrade to its lowest sovereign investment grade on Friday, Moody’s cut the ratings of a dozen banks and companies including embattled power utility Eskom, further shaking confidence in Africa’s most advanced economy.

Quarterly business confidence and April retail sales due in the session are expected to shed more light on ailing economy. Growth shrunk 0.7 percent in Q1 2017 after a 0.3 percent contraction in Q4 of 2016.

Traders expect the U.S. central bank to increase interest rates by a notch when it concludes a policy meeting on Thursday, a move that could dampen demand for high-yielding emerging market assets.

South African bonds were flat, with the yield on benchmark 2026 government bond inching up 0.5 basis points to at 8.445 percent.

Stocks set to open higher at 0700 GMT, with the JSE securities exchange’s Top-40 futures index up 0.3 percent.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

 

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Lafarge Africa to market $302 mil bond to refinance loans

28 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Lafarge Africa is in the middle of a roadshow to market a 60 billion naira ($302 million) bond programme to refinance loans at United Company of Nigeria (UNICEM), which it acquired last year, its finance chief said on Thursday.

“We are in the process of restructuring the UNICEM debt. We are in the middle of a roadshow,” Lafarge Africa Chief Finance Officer Anders Kristiansson told an analysts call.

“We want to refinance the U.S. dollar borrowings that we have in UNICEM.”

($1 = 198.55 naira)

 

(Reporting by Chijioke Ohuocha; Editing by Alexander Smith)

 

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Tripling of South African bond buying signals new faith in rule of law

18 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A tripling of South African bond sales this year on Monday added to signs that investors’ faith in its institutions has been somewhat restored following a court ruling against President Jacob Zuma and the appointment of a former finance minister.

Securities exchange figures showed foreign investors bought a net 30 billion rand ($2 billion) worth of South African debt in 2016, compared with 10 billion in the same period last year.

The Treasury is flush with cash after a $1.25 billion 10-year bond sale this month was two times oversubscribed, and bond yields have recouped heavy losses in December after Zuma fired his finance minister, raising fears of political interference.

Benchmark yields, which spiked to a record 10.38 percent after Zuma briefly replaced Nhlanhla Nene with a virtually unknown politician, have since recouped nearly 140 basis points, a third of which was after the ruling against Zuma.

Sentiment, helped by Zuma bringing back Pravin Gordhan as finance minister, improved further after the Constitutional Court found that the president was wrong to ignore an order to repay state funds used to upgrade his Nkandla home.

“Having Pravin Gordhan back in control, and having this noise around Nkandla and Jacob Zuma, is showing the market that South African institutions are still strong,” Investec fixed income portfolio manager Vivienne Taberer said.

Analysts said markets were also cheered by a backlash against the Gupta family and its businesses. South Africa’s four big banks cut ties with a Gupta-owned investment company over criticism that the family has undue influence with Zuma.

“Government and state owned enterprises can get about their constitutionally mandated activities, less encumbered by predatory actions of (the) president and his allies,” BNP Paribus Securities South Africa analyst Nic Borain said.

“We expect markets – especially the bonds, currency and banks – to track the ebbs and flows of Jacob Zuma’s fortunes.”

Added to that, signals from the central bank and Treasury that they will pursue prudent policy have seen South African assets leading emerging market gainers, boosted by signs that the U.S. may not hike interest rates as quickly as expected.

Recent economic data out of China, a major consumer of emerging market commodities, has also lessened worries over a slowdown in the world’s second largest economy.

“If this environment, where we see the Fed not really doing much and being cautious over the balance of this year, continues and we continue to see reasonable data coming out of China … then this constructive risk environment can continue for the next three or so months at least,” Investec’s Taberer said.

The litmus test for assets will be whether credit rating agencies decide to downgrade debt. A cut from Moody’s would mean a loss of its investment grade status and possible ejection from the prestigious World Government Bond Index (WGBI).

“Such an ejection would represent possibly the most dramatic outcome of a ratings downgrade and should be South Africa’s biggest cause for concern,” Citadel chief strategist Adrian Saville said.

 

(By Stella Mapenzauswa. Editing by James Macharia and Louise Ireland)

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South Africa’s dollar bond oversubscribed despite political cloud

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa has successfully issued a dollar bond overseas to help finance its medium-term foreign currency commitments, the Treasury said on Friday, touting this as a sign of investor confidence despite political upheaval.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

On Friday, the Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

“The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” it said.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he flouted the law by not heeding a directive to make payments for upgrades to his personal home.

Ratings agencies, most recently Standard & Poor’s, have warned they might downgrade South Africa if political issues divert the government’s attention from properly implementing policy.

S&P and Fitch both rate South African credit just one notch above junk, while Moody’s is two notches over sub-investment grade.

Analysts said South Africa had benefited from a general rise in demand for high-yielding emerging market assets after the U.S. Federal Open Market Committee (FOMC) signalled it might be a while before U.S. rates rise.

“There was clearly a window here for them to issue after the FOMC reprice and before a wall of downgrades from the ratings agencies,” Nomura analyst Peter Attard Montalto said.

“They have significant forex deposits already so they can probably wait until next year for the next issuance.”

The rand extended gains against the dollar after the Treasury’s statement, climbing to a session high of 15.0155, up 1.5 percent for Thursday’s close.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8.5 basis points to 9.19 percent.

The Treasury said the new foreign bond formed part of South Africa’s 2016/17 financing programme and would partly finance foreign currency commitments of $6.4 billion over the medium term.

The coupon for the bond represents a spread of 335 basis points (bps) above the 10-year U.S. Treasury benchmark, which analysts said was in line with South Africa’s current funding rate.

“I don’t think it’s too expensive,” said Rand Merchant Bank trader Gordon Kerr.

The price compares to initial thoughts of plus 350 bps and guidance of plus 335 bps, plus or minus 5 bps.

“There is always demand for our paper and there will always be demand for EM in general because of the nice yields that it provides,” Rand Merchant Bank trader Gordon Kerr said.

 

(By Stella Mapenzauswa. Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg and Claire Milhench in London)

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Nigeria to issue 90 bil naira bonds on Feb 10

4 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria plans to raise 90 billion naira ($452.26 million) worth in local currency denominated bond at an auction on Feb. 10, the second of such this year, the Debt Management Office (DMO) said on Thursday.

The debt office said it will sell 40 billion naira in paper maturing in 2020 and 50 billion naira in the debt maturing in 2026, using the Dutch Auction System, in which the price is lowered until the bond is bought.

Both debt notes are reopening of the previously issued bond.

Nigeria is planning to borrow as much as $5 billion to help fund its budget deficit due to the plunge in oil, which has also sent the naira NGN=D1 currency into a tailspin.

It expects a deficit of 3 trillion naira ($15 billion) in 2016, up from an initial 2.2 trillion naira ($11 billion) estimate.

Nigeria’s total debt rose to 12.60 trillion naira ($65.42 billion) as of December 2015, up from 11.2 trillion naira in 2014. [nL8N15I3J3]

 

($1 = 199 naira)

 

(Reporting by Oludare Mayowa Editing by Jeremy Gaunt)

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Nigeria to sell 80 billion naira of bonds on Jan 20

11 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

money nigeria

LAGOS (Reuters) – Nigeria said on Monday it will sell 80 billion naira ($402.92 million) worth of bonds  denominated in the local currency at an auction on Jan. 20, its first debt auction of the year, the Debt Management Office (DMO) said.

The debt office said it will issue 40 billion naira each of bonds maturing in 2020 and 2026, using the Dutch auction system.

The 2020 debt is a reopening of a previously issued bond. The 2026 debt is a fresh issue. Results of the auction are expected the next day.

Nigeria has proposed a plan to issue 260 billion to 390 billion naira in 5-, 10- and 20-year naira bonds in the first quarter of the year. [L8N14V1QE]

Nigeria said it will borrow about 900 billion naira locally to finance part of the 2.2 trillion naira deficit in its 2016 budget.

($1 = 198.5500 naira)

 

(Reporting by Oludare Mayowa, editing by Larry King)

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Mauritius 3-year Treasury bond yield rises to 4.56%

28 October 2015 Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – The weighted average yield on Mauritius’s three-year Treasury bond rose to 4.56 percent on Wednesday from 4.51 percent at a sale of a similar bond on Oct. 21, the central bank said.

Bank of Mauritius sold all the 1 billion rupees ($28.04 million) worth of debt it had offered. Bids totalled 2.625 billion rupees, with yield offers ranging from 4.25 percent to 5.14 percent.

The bond has a coupon rate of 3.72 percent and is due on Aug. 21, 2018.

 

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JP Morgan to remove Nigeria from government bond index

9 September 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – JP Morgan will remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, the bank said on Tuesday, after warning the government of Africa’s biggest economy that currency controls were making transactions too complicated.

The removal will force funds to sell Nigerian bonds, triggering potentially significant capital outflows and raising borrowing costs for the government.

Struggling with a plunge in vital oil revenue, Nigeria had imposed currency restrictions to defend the naira after the burning of dollar reserves failed to halt a slide.

The JP Morgan index tracks around $210 billion in assets under management.

Some bonds will be removed from the index by the end of September and the rest by the end of October, JP Morgan said.

The bank had warned Nigeria that to stay in the index, it would have to restore liquidity to its currency market in a way that allowed foreign investors tracking the index to conduct transactions with minimal hurdles.

Nigeria became the second African country after South Africa to be listed in JP Morgan’s emerging government bond index, in October 2012, after the central bank removed a requirement that foreign investors hold government bonds for a minimum of one year before exiting.

The index added Nigeria’s 2014, 2019, 2022 and 2024 bonds, giving Africa’s biggest economy a weight of 1.8 percent in the index.

“Foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency,” the bank said in a note.

The central bank had to devalue the naira and pegged it at a fixed rate against the dollar, turning trading into a one-way quote currency market whose lack of transparency upset investors and businesses.

The index provider said Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months. To get back in, it would have to establish a consistent record of satisfying the index inclusion criteria, such as a liquid currency market.

Nigeria’s Finance Ministry, central bank and Debt Management Office said in a statement they “strongly” disagreed with the index expulsion, saying that market liquidity was improving.

“While we would continue to ensure that there is liquidity and transparency in the market, we would like to note that the market for (government) bonds remains strong and active due … to diversity of the domestic investor base,” the statement said.

Traders told Reuters on Tuesday the central bank started rationing dollars to foreign investors last week.

Nigeria’s foreign reserves stood at $31 billion as of Sept. 7, down more than 21 percent from a year earlier, when they were $39.6 billion, the central bank said.

“Nigeria’s inclusion in the GBI-EM index was generally seen as a big step forward in its integration into global financial markets, opening the market to new investment and raising its profile worldwide. That will now be reversed,” said Alan Cameron, an economist at Exotix.

With Nigeria’s removal, countries such as Malaysia, Indonesia and Thailand have increased their weight by more 25 basis points as of Aug. 31, JP Morgan said in the note.

Foreign holdings of Nigerian government bonds stood below $2.75 billion, said Samir Gadio, the head of Africa strategy at Standard Chartered Bank. They had been around $8 billion in September 2014.

“This will initially trigger excess volatility in the market as exiting offshore accounts and onshore investors may push yields higher,” Gadio said. “A potential exclusion from the GBI-EM indices would make it more difficult to attract foreign portfolio flows in the future as Nigeria will need to rebuild its market credentials.”

By Chijioke Ohuocha (Reuters)

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