Archive for the 'Banks' Category
May 13th, 2013 by Tom Minney
African countries (apart from South Africa) are set to place $7 billion of debt this year, buoyed by low interest rates and a huge global appetite. According to this article in Bloomberg Businessweek by Roben Farzad, this year’s debt issues will be more than the previous 5 years combined and African capital markets are feeling the boom.
No wonder international investors who are “grabbing for yield and growth” (according to Farzad) are looking to Africa which the International Monetary Fund forecasts will grow at 5.6% this year against 1.2% in developed countries. But Africa’s terrible infrastructure, including electricity, bridges, roads and wastewater treatment, is costing African sat least 2 percentage points of growth. Some of the new bond proceeds are likely to go on infrastructure, which needs investments of up to $93 billion a year.
The article cites research from JP Morgan Chase that average yields on African debt fell 88 basis points in the past 12 months, to 4.35%. “Nigeria, Gabon, Ghana, Ivory Coast, Namibia, the Congo, Senegal, and the Seychelles have all seen their borrowing costs fall this year.”
“It’s a hugely exciting story,” Jim O’Neill, the chairman of Goldman Sachs Asset Management who plans to retire this year, said in an April 23 interview with Bloomberg Television in London, writes Bloomberg reporter Chris Kay: “The only thing one has to be a little bit careful of are many of those markets are still very undeveloped and suddenly there’s a lot of people around the world regarding Africa to be sort of fashionable and trendy.”
Farzad wonders how easy it will be to “service so much easy-money debt when the credit cycle turns, or if commodities and political stability decline. At least for now, though, you get the impression that sub-Saharan Africa has turned a corner in global capital markets.” And journalist Chris Kay quotes Charles Robertson, global chief economist at Renaissance Capital: “For governments, great, don’t look a gift horse in the mouth. I still don’t believe investors are getting risk-adjusted returns in the dollar-bond space.”
According to Kay, debt-forgiveness programmes have helped 45 African nations cut debt to about 42% of gross domestic product this year from an average 120% in 2000, according to data compiled by Bloomberg and IMF estimates. South Africa’s Finance Minister Pravin Gordhan says debt will peak at 40% of GDP in 2016, compared with more than 100% for the U.S. and an average 93% in the eurozone.
Another reason why Africa offers lower risk is that taxpayers have no expectations of massive social and other spending in nearly all countries. Meanwhile global appetites are shown by the $20 trillion reportedly invested in debt at less than 1% yield.
Some potential issues
Nigeria planning to offer $1bn in Eurobonds and a $500m Diaspora bond, according to Minister of State for Finance Yerima Ngama. It was recently included in JP Morgan and Barclays local bond indices. Yields on the existing $500m Eurobond, due 2021, were down to 4.05% by 3 May, from a peak of 7.30% in October 2011.
Kenya really boosted investor confidence in Africa with its peaceful outcome after elections on 4 March and the Finance Minister Robinson Githae said on 11 March they could be in line to issue up to $1bn by September.
Ghana fuelled by an oil boom, has seen its debt yields on the 10-year bonds down 3.43 percentage points to 4.82% since their issue in October 2007, said Bloomberg.
Zambia successfully raised $750m last year at 5.625% and is thinking to return for another $1bn. Yields were up 20 basis points to 5.66% by 3 May.
Tanzania has asked Citigroup to help it get a credit rating before issuing a maiden Eurobond of at least $500m. Finance Minister William Mgimwa said a total of $2.5bn was bid for a private offering of $600m of Government debt in March. According to this story on Reuters that bond’s pricing and structure at the time had shocked markets and appeared to benefit investors: “The cheaply priced US$600m seven-year private placement was described as a “disaster” by one banker. And certainly the immediate secondary market performance looked terrible. The bonds jumped 2.75 points on their first day of trading.. That works out at a cost to the government of US$4m a year in coupon payments, assuming that the bonds could have priced at the tighter level.”
Angola did a private sale of $1bn in debt in 2012 and will go for $2 billion this year, according to Andrey Kostin Chairman of VTB Bank OJSC, who helped arrange the first issuance, last October.
Mozambique and Uganda may also issue foreign currency bonds of $500m each, according to Moody’s last October.
Gabon’s $1bn of dollar bonds are down 4.78 percentage points to 3.13% since they were issued in December 2007.
June 6th, 2012 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, and the African Development Bank (www.afdb.org) are to work together to facilitate local currency lending and bond issuance in Africa. They agreed to collaborate and benefit from each other’s local currency bond issues. This will enhance their local currency funding capacity to support their clients’ development projects.
On 1 June they signed an ISDA Master Agreement to enter into cross-currency swap transactions and for each it is the first with another multilateral financial institution. A “master agreement” is agreed between 2 parties and it sets out standard terms that apply to all the transactions entered into between them so that each time that a transaction is entered into, the terms of the master agreement do not need to be re-negotiated and apply automatically. The ISDA master agreement is published by the International Swaps and Derivatives Association (www.isda.org) and the early ones were used to snce 1985 to develop a Swaps Code but they can also be used for Over-The-Counter derivatives trading.
There is a concerted drive to strengthen debt markets in Africa. Local-currency bond markets provide long-term, local currency finance for projects and this protecting them from foreign exchange risks, although interest rates are often higher. Debt markets should be developed to be a key source of risk finance, particularly as foreign capital inflows became less because of the ongoing global financial crises. This agreement is the first step in an initiative for greater collaboration among multilateral institutions to accelerate local capital market development and increase local currency financing options.
In 2011, the Group of 20 called for a concerted effort to develop and strengthen local currency bond markets in emerging markets.
IFC Vice President and Treasurer, Jingdong Hua, said in a press release: ”Expanding long-term currency initiatives is a cornerstone of IFC’s strategy to strengthen capital markets in developing countries. Helping to establish and strengthen such markets allows us to work with regulators and local institutions to ensure that capital market regulations are effective and entrepreneurs are able to grow and create jobs.”
AfDB Vice President for Finance Charles Boamah said: “Promoting the development of local capital markets in Africa is paramount to successful, sustainable economic development. This agreement supports our African Financial Markets Initiative, which aims to further the development of domestic African capital markets, enlarge the investor base, and reduce African countries’ dependence on foreign currency denominated debt.”
Local currency debt issued in Africa
Since 2007, IFC has committed more than $650 million in 17 different local African currencies through a combination of swaps, bonds, and structured finance products.
IFC has issued local currency bonds in Morocco, the West Africa CFA zone (XOF) and the Central African CFA zone (XAF). It has been approved to issue local currency bonds in Kenya and Nigeria and is working with regulators in Botswana, Ghana, Kenya, South Africa, Uganda, and Zambia to obtain consent to issue local currency bonds under a Pan-African Domestic Medium-Term Note Programme and with 8 countries in the West African Economic and Monetary Union to establish local currency bond programmes.
The AfDB has issued bonds denominated in or linked to the Botswana pula, Ghanaian cedi, Kenya shilling, Nigeria naira, Tanzania shilling, Uganda shilling, and Zambian kwacha, since 2005. The AfDB is also a regular issuer in South African rand (ZAR), its third largest lending currency. Since 2005, the AfDB has issued more than ZAR 25 billion in the ZAR domestic and Euro markets.
The AfDB has been authorized to issue bonds denominated in over 15 African currencies including Cameroon, Egypt, Gabon, Mauritius and Senegal. It is requesting more authorizations. In Uganda it plans its first issue under a Global Debt Medium Term Note Programme, which will provide local currency financing and it is to facilitate an inward listing in Uganda.
About the organizations
IFC is the largest global development institution focused exclusively on the private sector. Its investments have reached an all-time high of nearly $19 bn.
The mission of AfDB is to help reduce poverty and improve living conditions in its regional member countries, focusing on inclusive growth, infrastructure, regional integration and private sector development. It approved more than $7 bn in operations in 2011 alone.
Social media
IFC
www.facebook.com/IFCwbg
“>www.twitter.com/IFC_org
www.youtube.com/IFCvideocasts
www.ifc.org/SocialMediaIndex
AfDB
Like us on Facebook, African Development Bank Group
Follow us on Twitter @AfDB_Group
June 6th, 2012 by Tom Minney
The best in African banking was celebrated recently at the 6th edition of the African Banker Awards, under the patronage of the African Development Bank (www.afdb.org) and African Banker magazine (www.africasia.com/africanbanker). The awards highlight outstanding talent and achievement in Africa’s financial sector. Top African Ministers of Finance, central bank governors, bank CEOs, senior executives and others gathered in Arusha, Tanzania in the shadow of Mt Meru and Mt Kilimanjaro.
There was a moving moment when Ecobank CEO, Arnold Ekpe, was presented with the Lifetime Achievement Award by the founder and chairman of IC Publications, (publisher of African Banker), Afif Ben Yedder. Ekpe was given a standing ovation. Ecobank, based in Togo and spread across Africa, beat strong challengers to emerge as the Bank of the Year. There were more cheers when Dr Eleni Gabre-Madhin, founder and CEO of the Ethiopian Commodity Exchange, was named as African Banker Icon 2012.
Olusegun Agbaje, Managing Director of Guaranty Trust Bank, Nigeria was awarded the prize for African Banker of the year by Tim Turner, Director of the Private Sector Operations of the AfDB.
The Best Regional Bank winners from each of the five regions of Africa were: Attijariwafa Bank, Morocco for North Africa; BGFI, Gabon for Central Africa; Bank of Kigali, Rwanda for East Africa; Access Bank, Nigeria for West Africa; and BCI, Mozambique for Southern Africa- thus highlighting Africa’s diversity but strength as one continent.
IC Publisher Omar ben Yedder said: “We have recognized some superb individuals and institutions tonight. Africa’s financial sector is a major vehicle for driving the economic growth that has become the talk of the investor community around the world. We have honoured individuals who are prepared to take the bull by the horn, to carry out well thought out visions and who have raised the bar and in some cases taken difficult decisions to deliver on their agenda. Good examples are the Central Bank Governor of Tunisia and the Finance Minister of Guinea. The winners this year represent a good mix between francophone and Anglophone Africa, big and small countries. They reflect the achievements in banking and finance all over Africa.”
The African Banker Awards are organised by African Banker magazine, IC Events and BusinessinAfrica Events.
African Banker was launched in 2007 and is the only pan-African magazine dedicated to banking on the continent and is published in French and in English. It has become an essential tool of the people and institutions that pull the strings in Africa’s banking and finance industries.
Declaration of Interest: I am a judge of the African Banker Awards 2012 and 2011 and I also write for African Banker magazine.
Photo here:
October 20th, 2011 by Tom Minney
Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.
New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.
September 8th, 2011 by Tom Minney
[SPONSORED STORY] Banking is changing fast and nowhere more than in the African markets, where growth opportunities are huge with some 250 million households still unbanked, but only for banks with the skills and technology to chase them. Banks are expanding fast across Africa, heralding new competition. Innovative banks are seizing opportunities served up by technology to reach out to millions of new customers and find ways to offer financial services that will help them increase bank revenues, through agency or branchless banking, microfinance, SMME lending, or mobile money, e-wallets and biometrics.
Banking strategies for the future revolve around “base of the pyramid”, “technology convergence”, “cloud” and “inclusive banking”. In order to grow against competitors, banks are moving into technology, from core banking systems, adding a range of user interfaces, including Internet, mobile phones, call centres. In 2011 banking leaders are moving to agency banking and branchless lending. Lessons can be learnt and the future charted for emerging markets, including India, South Africa, Kenya and Malaysia.
Speakers at a top conference “Technology Innovation for Banks in Growth Economies” set for London from 28-30 November include global banking leaders in development, SMME and micro-finance institutions such as Anil Kumar, (CEO of IFMR Rural Finance, India), Yolanda van Wyk (CEO Smart Services at First National Bank, South Africa), Sandeep Indurkar (Head Mobile Payments – Internet Banking and Mobile Banking, ICICI Bank, India). Technology and finance expert speakers include Gerhard Romen (Director Mobile Financial Services Nokia), Dr Tim Kelly (Lead ICT Policy Specialist, The World Bank) and Menno van Doorn (Director VINT Research Institute for the Analysis of New Technology). The agenda covers software-banking partnerships, the impact of broadband, government pressures towards financial inclusion, biometrics including fingerprinting, cloud-based technology for banking, e-wallets and banking in growth economies and technologies for scale.
The conference is aimed at banks across the emerging and frontier markets, particularly where their growth will be linked to new customers with growing incomes, also technology experts and banking system vendors, development finance experts, policy-makers and leading commentators.
Together they will discuss potential solutions to challenges such as:
• Poor connectivity – satellites, cable and changing national and regional regulation
• Central and development banks plans to upgrade current ICT infrastructure
• Infrastructure of tomorrow being prepared for the next stage of branchless banking
• Understanding infrastructure needed to support the alliance between telecoms and banking providers
• Can microfinance banks be a delivery channel hard-to-reach regions?
The first day, 28 November, consists of workshops: i) the fast-track on how ICT creates better delivery channels for financial products to reach the unbanked and ii) branchless banking – seize opportunities and mitigate risks.
The conference website http://technologyinnovation-banking.com gives details and bookings. Or call: +1 212 537 5898 or email: info@hansonwade.com. Early bird discount of up to GBP300 expires in 8 days.
August 25th, 2011 by Tom Minney
As the East African region moves towards faster integration, Tanzania is preparing to ease controls on the amount of shares foreigners can buy, in line with changes in the rest of the region. The Dar Es Salaam Stock Exchange (www.dse.co.tz) is also hoping to increase from 15 to 18 listed companies and is preparing for an initial public offering (IPO) for Precision Air (www.precisionairtz.com) during September and cross-listings of 2 mining firms listed in London.
Gabriel Kitua, CEO of the Tanzanian bourse, told Reuters on 24 August at a meeting organised by the Nairobi Stock Exchange: “Tanzania is not exactly a closed market. Up to 60% of any listed security is available to any citizen of the world, 40% is reserved for Tanzanians… with time, the control will be erased especially as we go to the regional monetary union where free movement of funds across the countries will automatically be there.”
Reuters says the 5-nation East African Community (EAC) bloc of Rwanda, Burundi, Uganda, Tanzania and Kenya aims to have a monetary union in place in 2012 and move to a political federation by 2015. It reports that Tanzania has the tighter capital controls, including barring foreigners from investing in government securities.
Kitua also said that the approval of the cross-listing of African Barrick Gold Corporation (www.africanbarrickgold.com) is advanced: “The approval process is almost complete”. He added “The other one is in very initial stages … it is a mining company,” according to Reuters.
Barrick (ABX, listed on the Toronto and New York stock exchanges) owns 73.9% of African Barrick Gold and raised $884 million through offering the rest of the shares in an IPO on the London Stock Exchange in March 2010. Barrick describes itself as “the gold industry leader, with a portfolio of 26 operating mines and advanced exploration and development projects located across 5 continents”.
Precision Air’s listing application was received and being considered by the Capital Markets and Securities Authority (CMSA) in February, according to local news reports. At the time it was reported that Precision Air sought to raise $25m (about TSh38bn) in the IPO. Kenya Airways owned 49% and Michael Shirima, the founder and chairman of the airline, owned 51%. The IPO would see their stakes diluted to 34.2% and 34.6% respectively.
Reuters also adds that East African Breweries Ltd of Kenya is expected to offload its 20% stake in Tanzania Breweries Limited in a public offering. Kitua rejected claims in a regional paper earlier this year that EABL had been compelled by Tanzanian authorities to offer the shares at a set price: “In capital markets there is no compelling of people. This is a free market economy and decisions are done by the board of directors of the companies and no one can interfere with that.”
The agency says the most heavily traded shares on the DSE are banks such as CRDB and National Microfinance Bank and manufacturer Tanzania Cigarette Company. TBL is the biggest by market value.
“For the last 12 months the Tanzania share index has risen by 17% and the all share index by close to 7%. The market has been growing,” Kitua said. The Tanzania share index excludes shares cross-listed from the NSE, including Kenya Airways. Kitua said the postive performance is due to good earnings by listed companies and the stable Tanzanian economy: “There are signals that the trend will be on an increase for the next 6 months.” He warned that inflation is past 10% and is emerging as a challenge.
The DSE delisted the National Investment Company (NICOL) with effect from 6 July after a 1-month suspension from 6 June and it become the first company in the 12-year history of the Tanzanian bourse to be delisted. This was on account of the firm’s failure to submit 2009 and 2010 financial results, and failure to comply with a directive from the DSE Governing Council about plans to sell 22m shares it owned in National Microfinance Bank (NMB), which is also listed.
August 8th, 2011 by Tom Minney
The Nigerian Stock Exchange (www.nigerianstockexchange.com) has placed 24 companies on full suspension for failing to submit their financial statements for the year ended 31 December, 2010 (including some since September). The NSE is reported in Nigerian media as making the suspension effective from 2 August, after the companies were given a 1-month technical suspension from 1 July. The NSE has also suspended trading in 3 nationalized banks with effect from 5 August.
In addition, 9 companies were placed on technical suspension for failing to submit their audited accounts for the year ended 31 March, 2011. This means trading is allowed, but no price movement. Further action could be taken if they do not submit results.
Full suspension means there are no transactions on the shares of the companies until the suspension is lifted. Initially 48 companies were placed on technical suspension on 1 July, but 24 of them had submitted their account statements and the technical suspension was lifted. The compliance rate is now 89% of listed companies.
According to reports, affected companies include Dangote Flour Mills, African Alliance Insurance, UNTL Textiles Plc, Daar Communications Plc, Omatec Computers, African Alliance Insurance Plc, Great Nigeria Insurance Plc, Guinea Insurance, Standard Alliance Plc, MTI Pl, and Investment & Allied Assurance. According to one report, Omatek and UNTL had submitted results on 3 August, within 24 hours of being suspended.
The bourse CEO, Oscar Onyema, was reported as saying it was painful to place companies on suspension, but that the exchange would ensure that it enforces its rules.
3 banks suspended pending delisting
The banks were suspended after being sold to the Asset Management Corporation of Nigeria (AMCOM). According to an announcement by the NSE: “Pursuant to the nationalization of AfriBank Plc, Bank PHB Plc, and Spring Bank Plc by the Nigerian Deposit Insurance Corporation (NDIC) on Friday, August 5th, 2011 and subsequent purchase of the banks by AMCON, the NSE has placed the shares of the affected banks on full suspension as a first step towards their delisting from the Daily Official List. “This means that no trading will occur in the shares of these banks as these banks no longer exist following the revocation of their licenses by Central Bank of Nigeria
The Central Bank of Nigeria on 5 August revoked the 3 banks’ licenses and the Nigeria Deposit Insurance Corporation (NDIC) transferred their assets and liabilities to newly-formed “bridge banks”, which were then bought by AMCOM, which is to provide enough capital to restore the banks to capital adequacy. According to news reports the AMCOM statement read: “AMCON has identified independent and credible persons with significant and required experience to fill the board and senior management positions for the banks and will be seeking the approval of the CBN for their appointments. AMCON is confident that the new teams will manage the banks to establish strong market positions and effectively compete in the Nigerian banking sector, providing quality service to their customers and value to shareholders.”
AMCON would evaluate its options and consider the optimal exit strategy to maximize returns. According to a breakdown, AMCON would inject N285 billion into Mainstreet Bank, formerly Afribank, N283 billion into Keystone Bank, formerly Bank PHB, and N111 billion into Enterprise Bank, formerly Spring Bank.
Dr. Kingsley Moghalu, Deputy Governor, Financial System Stability, was reported as saying the move was to ensure all 9 banks rescued would be recapitalized by 30 September. The banks had failed a 2009 stress test. Recapitalization agreements signed with investors by 4 of the other rescued banks would solve around 80% of the banking crisis and the bailout package would be recouped from all rescued banks: “We believe we have drawn a line under the banking crisis. By September 30, all banks in Nigeria will be fully capitalized.”
Several organizations, including Nigerian Shareholders Solidarity Association, Afrinvest Research and Chartered Institute of Bankers of Nigeria (CIBN), were reported to have criticized the CBN move and said it should have waited until the 30 September deadline.
June 15th, 2011 by Tom Minney
Commiserations on the passing of Tayo Aderinokun, CEO and MD of Nigeria’s Guaranty Trust Bank plc (www.gtbank.com), listed on the Nigerian and London stock exchanges, who died from cancer in Paddington hospital, London on 14 June, two months after he took sick leave and at age 56 years. He was a co-founder of the bank in 1990 and grew it to a top bank that has high regard across world markets, picking up many international banking awards on the way. The bank said in a statement on its website that Segun Agbaje, who was named acting managing director on 20 April, will continue to manage operations. Nigerian papers have published obituaries, such as this one in This Day.
May 19th, 2011 by Tom Minney
The Rwandan Government plans to raise Rwf25 billion ($42.2 million) through the sale of its shares in Bank of Kigali Ltd (www.bk.rw) and telecom company MTN Rwanda (www.mtn.co.rw) in coming months.
The bank is Rwanda’s biggest lender by assets and it said the Government will sell a 20% stake to private investors in an Initial Public Offering (IPO) scheduled for June, according to a report on Bloomberg. In addition the bank will offer 25% of its shares to the public, according to the report, citing Chief Operating Officer Lawson Naibo. The Government owns 66.3% and will anticipate selling the rest of its stake later, according to John Rwangombwa, Minister of Finance and Economic Planning, during a press conference on 9 May on the budget framework. He is quoted in the New Times newspaper as saying: “BK is confirmed; we are to sell our shares through an IPO. We started the process and it’s expected to be concluded by September, including listing BK on the Rwanda Stock Exchange (RSE).”
Minister Rwangombwa said there is expected to be strong demand. Last November 2010, the Government sold 25% of Brassieries et Lemonaderies du Rwanda SA (BRALIRWA), a unit of Heineken NV (HEIA), and the IPO was 174% oversubscribed. BRALIRWA shares closed at RwFr 228, up 68% on the January launch price of RwFr 136.
BK plans to open 44 branches across Rwanda in 2011, and the stock should be attractive stock given its rapid growth and stability.
The Minister also said Government is in negotiations with MTN Group regarding its 10% stake in MTN Rwanda. MTN Group is majority shareholder and has the right of first refusal on any share sales. The Minister reportedly said: “We have two options; if MTN gives us (Government) the price we want, we will sell the shares to them directly while the other option is through an IPO depending on the other investor.”
The Treasury will include the expected proceeds in the budget for the next fiscal year. The Minister said: “This is part of the Government commitment to promote accelerated economic growth under its five year plan of EDPRS (Economic Development and Poverty Reduction Strategy 2008-2012) but also its the approach to liberalise the market.” Rwanda is a high-growth country and a top performer in improving its business and economic climate. It is working towards an ambitious long-term Vision 2020 that seeks to transform the country into a middle-income economy.
The Government remains keen to use IPOs to support the growth of the Rwanda Stock Exchange launched on 31 January by boosting market liquidity and ultimately supporting the country’s economic growth through attracting more inventors and increasing national savings.
The RSE has so far mainly attracted Treasury and corporate bonds, and 2 cross-listed Kenyan companies, Kenya Commercial Bank (KCB) and Nation Media Group. BRALIRWA is the only local listing.
May 16th, 2011 by Tom Minney
Nigeria’s Guaranty Trust Bank (www.gtbank.com) is coming to the market with a $500 million Eurobond, which could potentially roll out into a $2 billion offering, according to sources in the last few days. The bank is listed on the Nigerian and London Stock Exchanges.
According to a story on Reuters on 12 May the bank is about to launch the 5-year bond and the price could be set at 7.75%. The lead managers are to be JPMorgan and Morgan Stanley.
In January the Federal Government of Nigeria’s issued a $500 mn debut 10-year Eurobond at a yield of 7%, according to a previous Reuters story. The offer was apparently 2.5 times oversubscribed but the bond had been trading broadly flat at 6.9% ever since. It was not much shaken by the April elections, as it seems the market is betting on stability and growth going forwards and the price climbed to give a yield of 6.1% by last week.
Reuters reports that GT issued a $350 million bond in 2007 which matures in Jan 2012. The bond has a coupon of 8.5% and is yielding 4.8%.
A research note from Standard Bank also boosts the bonds. “We consider the new Notes due 2016 to be one of the best emerging market bank securities in our universe. GTB is one of the largest banks in Nigeria. It is well-capitalized and highly profitable operating in a market that is hugely underpenetrated. Liquidity is strong. Management is experienced and sophisticated and very importantly to us, experienced in successfully negotiating a banking crisis. During the 2009 Banking crisis in Nigeria, GTB was resilient and quite successfully underwent increased regulatory scrutiny.” The bank says the bonds are at a “significant spread” to the Government bond and compared to other emerging market financial institutions trade, they find the bonds “attractive” and add “with time and increased local participation, we would not be surprised to see the Notes trading inside of 7%.”
The bank was founded in 1990 and at the end of the last financial year was Nigeria’s fourth largest by assets, with market capitalization of $3 bn.
Broker Exotix has also praised its “diversified loan portfolio, conservative management and superior risk management” and says it has superior asset quality.
