Archive for the 'Bonds' Category

Exploring African bond markets at Livingstone

Africa’s bond market gurus will gather in Livingstone, Zambia, on 29 October, to discuss trends and developments in the local currency bond markets. The 3 day gathering is organized by the African Financial Markets Initiative AFMI, which highlights African Development Bank’s leading role to develop Africa’s domestic local currency bond markets, establish best practices and document lessons.
The first day of the AFMI 10th anniversary workshop is open to the public, and highlights “enhancing transparency in African bond markets”. It includes panels on initiatives in the African capital markets ad steps to increase transparency in bond markets, led by your author.

Victoria Falls

There are also presentations on African Development Bank’s contributions to deepening local currency bond markets including: the data collection tool and platform, bringing together data from African central banks; the African Bond index ABABI, BADBC and BADBX compiled with Bloomberg.
A key highlight will be the progress of the African Domestic Bond Fund, recently listed in Mauritius.xx Other sessions cover regional integration, African credit risk measuring and a top Zambian panel highlighting the business opportunity in Zambia. Prof Leonce Ndikumana from Massachusetts University will speak on African illicit financial flows.
Top speakers also include Thapelo Tsheole (Chairman of the Committee of SADSC Securities Exchanges COSSE), Stefan Nalletamby (Director Financial Sector Development at AfDB), Cedric Mbeng Mezui (AfDB’s Chief Bond Markets Expert and AGFMI Coordinator), Joseph Rohm (MD Adventis and African Financial Sector Deepening Fund) and many others. Keynote speaker in the evening will be Christopher Marks (Managing Director and Head of Emerging Markets at Mitsubishi UFI Financial Group MUFG)
The conference is co-organized with Bank of Zambia and the session will include the Ministry of Finance, Lusaka Stock Exchange, BoZ, Investment Board and stakeholders.
The following days, 30-31 October, are closed sessions for central bankers.

African bond markets statistics

Here are a few overview statistics on African local currency bond markets taken from the African Financial Markets Initiative (AFMI) annual report 2017:

Total outstanding amount of African bonds and bills rose to $413bn in 2017 (up 13% on a year earlier), and bonds made up 70%. More than 80% of the total comes from 5 countries: South Africa, Egypt, Morocco, Nigeria and Kenya (descending order of market capitalization). However, many markets are small with only 8 above $10bn in market capitalization and 19 markets below $1bn.

A total of $245bn of treasury bonds and bills were issued in 2017, up 12% compared to 2016. Of this, a total of $196bn (80%) was in instruments with term to maturity of less than 1 year. On the bond markets, $19bn of instruments with terms of 1-5 years was issued, $12bn of bonds with term 5-10 years and $18bn of bonds longer than 10 years.

Top 10 bond markets (source AFMI annual report 2017)


The AfDB/AFMISM Bloomberg African Bond Index (ABABI) includes 75% of the most liquid local currency sovereign bonds in Africa and it covers South Africa, Egypt, Nigeria, Kenya, Botswana, Namibia, Zambia and Ghana. According to AFMI “This will enable governments to improve the terms at which they borrow in domestic financial markets, thus reducing their dependence on foreign currency denominated debt.” The bond index family also includes African Domestic Bond Index (ABMDI) plus 2 sub-indices BADBC, which is a capped index giving a maximum 25% exposure per country and reducing the influence of South African bonds, and BADBX, which excludes South Africa. BADBC index returned 20.26% in USD in 2017, driven by high-yielding local-currency markets and stable exchange rates. The index offers diversification for global fixed income investors.

AFMI has organized an African Financial Markets Database which is a single portal as a web platform (www.africanbondmarkets.org) covering monetary policy, public debt management, auction results and guide to buying debt, and an African bond data portal, as a channel to disseminate domestic bond market data, standardizing data collected from different institutions. By December 2017 it covered 43 countries. The portal collects data from official websites of Ministries of Finance, central banks, debt management offices and stock exchanges and is updated quarterly. A data query section and automated data collection are being built.

In September the African Domestic Bond Fund was listed on the Stock Exchange of Mauritius as the first exchange traded fund (ETF) giving a basket exposure to several African fixed income markets. For coverage see earlier article. It will boost development of markets by providing a source of funding for local borrowers while creating a new asset class of African fixed-income securities.

AFMI has also created an African Bond Markets Development Index, which charts the state of development of the bond markets. In 2017 some markets gained strength in terms of liquidity and maturity profile based on indicators such as macroeconomic variables, market structure and market liquidity. In the top 10, Botswana, Namibia, Mauritius, Kenya and Seychelles all improved their rankings, while Nigeria and Morocco both declined, Nigeria from #2 to #6.

Top 10 in African bond market development index 2017 (source AFMI)

Rising debt tide threatens credit ratings across Africa

Credit quality across Africa has been declining, according to analysts speaking at a credit ratings event in London. Global rating agency Moody’s says the last 12 months saw 7 downgrades out of its 21 African sovereign ratings. Seven credit ratings are on negative outlook and only Morocco and Egypt are on positive outlook.
Several countries including South Africa stayed with high Baa3 ratings. South Africa has a Moody’s sovereign release date (updated on rating) on 12 October. Other rating agencies S&P and Fitch downgraded its local currency bonds to “junk” status, meaning below investment-grade, according to this story from Bloomberg. Namibia has Ba1 status, with a negative watch following an August review.
Zambia’s long-term issuer rating has been downgraded to Caa1 stable in July, below Democratic Republic of Congo (DRC) which was rated B3 negative in June. Mozambique is rated Caa3 negative. Other countries which have seen rating downgrades are Angola and Kenya, while Tanzania and Cameroon are on negative outlook.
The bad news comes despite good growth in some parts of Africa. Key concerns are the ways governments manage fiscal policy, with elevated budget deficits and rising debt levels, after many governments issued large amounts of foreign currency bonds. Some countries which have borrowed heavily to invest into developing infrastructure face governance questions on whether prices are inflated – Zambia is particularly affected. Debt problems are worse because of local currency declines.
Investors into Africa at a Moody’s event in London on 26 September are also worried about global financial conditions and shocks, but are more confident on domestic politics.
Lucie Villa, Moody’s Vice President-Senior Credit Officer, commented that South Africa’s economy is likely to accelerate in 2019 but to remain timid, while recognizing the challenges faced by National Treasury meeting different fiscal and social objectives. Most foreign investors into South Africa use the ZAR currency.
Daniela Re Fraschini, Assistant Vice President in the Sovereign Risk Group, says East Africa remains the fastest-growing region, with Kenya, Uganda, Rwanda and Tanzania all forecast to grow well. Kenya and Tanzania are more resilient because their economies are more diversified. Rwanda has been consistently more competitive.
Rising oil prices could bring good news for Nigeria, Gabon, Congo and Angola.
Moody’s has increased its credit ratings from 31 to 51 African banks and Akin Makejodunmi, Vice President and Senior Credit Officer at Moody’s, says Islamic finance could double its share of the sector, from 5% to 10%, given that 40% of the population are Muslims.

For more on Moody’s credit ratings on African governments and many corporate issuers, see www.moodys.com

First African fixed income ETF listed in Mauritius, tracking bond index

The African Development Bank (AfDB) and Mauritius Commercial Bank Group (MCB) have launched the African Domestic Bond Fund (ADBF). The pioneer exchange-traded fund (ETF) is accessible to investors through its listing on 18 September on the Stock Exchange of Mauritius.

Sunil Benhimadhu, Chief Executive of the Stock Exchange of Mauritius submitted the Certificate of Listing of the African Domestic Bond Fund to Mr Stefan Nalletamby, Director AfDB FInancial Sector Development Department and Mr Rony Lam, CEO of MCB Capital Markets.


The ADBF fund will track the performance of the AfDB/AFMI Bloomberg African Bond Index 25%Capped, an index that comprises African local currency sovereign bonds of 8 African markets: Botswana, Egypt, Kenya, Namibia, Nigeria, South Africa, Ghana and Zambia. It is intended that sovereign bonds of other countries will be included in the index in future.

It is the first multi-jurisdictional fixed income exchange-traded fund (ETF) in Africa. The Bank has committed $25 million and is acting as an anchor investor of ADBF. It was listed on Stock Exchange of Mauritius came on 18 September 2018.

Fund Manager is MCB Investment Management (MCBIM), a subsidiary of MCB Capital Markets. MCBIM is a pioneer of the pan-African fixed-income asset class, it launched the MCB Africa Bond Fund, an actively managed mutual fund focused on African fixed income, in 2014. The African Development Bank says the fund has consistently outperformed its benchmark.

The AfDB’s African Financial Markets Initiative (AFMI) aims to strengthen African economies by reducing their dependency on debt denominated in foreign currency (FX), increasing the range of available financing options, and acting as a catalyst for regional market integration.

According to the press release: Pierre-Guy Noel, chief executive officer of MCB Group, said: “We are delighted to partner with the African Development Bank in launching this pioneering fund. This attests to the Bank and MCB’s commitment to help develop the local currency fixed income markets on the continent and to the quality of our investment management capabilities. The fund listing on the Stock Exchange of Mauritius brings to investors the opportunity to access African government bonds conveniently.”

Cédric Achille Mbeng Mezui, Chief African Bond Markets & Coordinator of African Financial Markets Initiative (AFMI), said: “A key milestone has been achieved today with the listing of the first multijurisdictional Sovereign Bond ETF, namely the African Domestic Bond Fund (ADBF) on the Stock Exchange of Mauritius. Next steps: The dual listing on the Nigeria Stock Exchange and increased investment in this Fund.”

Recent Africa share listings news

London and South Africa
Old Mutual Limited, an insurance company founded 173 years ago, moved its main listing back to Johannesburg on 26 June and has dual-listings in Namibia, Malawi, Zimbabwe and London, as reported by Bloomberg and Moneyweb. Old Mutual plc terminated its listing on the London Stock Exchange on 25 June, and spun off UK wealth manager Quilter plc which was listed separately on the LSE (and dual listed on the JSE) the same day with a market capitalization of £2.75bn based on a £1.45 share price. It also sold its US asset manager and Latin American units as it believed each unit would be worth more separately. The “home-coming” was marked with a parade in Sandton and events in Malawi, Namibia and Zimbabwe. Old Mutual had moved its head office and primary listing to London in 1999, according to Reuters, but now its prominent riverside London head office is being wound down, with staff down from 120 to 40 in 2018.
The stock was listed in Johannesburg at ZAR28.50, valuing the company at some ZAR140bn ($10.7bn). According to Sanlam analyst Renier de Bruyn, quoted by Bloomberg, the share price did not reflect the hoped-for “value unlock” and Old Mutual was at an “attractive” price-earnings ratio of 7.5x, compared to 13x for its biggest South African rival, Sanlam. Bloomberg quotes Brad Preston, chief investment officer at Mergence Investment Managers Ltd: “Old Mutual’s strategy of trying to build a completely global business I think clearly has failed. We’ve seen them reverse that completely.” It bought United Asset Management Corp in USA for $1.4 billion in 2000 and Skandia AB in Sweden for $8bn in 2006. Between mid-1999 and June 2018 Old Mutual’s shares in Johannesburg returned 480% while Sanlam’s returned almost 2,000%. Sanlam had focused on African markets and reached 34 countries, including buying out remaining shares in Morocco’s Saham Finances SA earlier in 2018 for $1.1bn. Old Mutual is only in 13 countries.
Next step will be the unbundling of shares in Nedbank Group by about December 2018. Old Mutual owns 53% since it bought in under apartheid capital controls in 1986 and it is expected to reduce that to 19.9%.

London
Microfinance firm ASA International listed on the London Stock Exchange on 13 July. Its 85% shareholder Catalyst Microfinance Investment had partially sold half its stake by offering 40m shares at GBP2.24 each. ASA International was set up in 2007 and is one of the larges and most profitable international microfinance institutions, with 1.8m clients, particularly low-income and underserved women entrepreneurs. It operates in Asia (7)%) and in Africa (30% of clients, including in Tanzania, Uganda, Kenya, Rwanda, Nigeria, Ghana and Sierra Leone. It has 1,387 branches and employs 9,000 staff.

Mauritius and London
Grit Real Estate Income Group, a pan-African real estate company based in Mauritius and investing in 7 countries Botswana, Kenya, Mauritius, Morocco, Mozambique, Ghana and Zambia with plans for Senegal and the Seychelles, raised $132.1m through selling 92.4m shares at $1.43 each, before listing on the London Stock Exchange main board on 31 July. The new funds are for more investments in Mozambique and Ghana. Previously there were 214m shares listed in Johannesburg Stock Exchange and Stock Exchange of Mauritius. Bronwyn Corbett and Sandile Nomvete built the Delta International Property Fund from R2.2bn to R11.8bn. It became Mara Delta Property Holdings and was then rebranded Grit and the company headquarters moved to Mauritius, according to this 2017 interview in Finweek magazine.
Corbett commented in a press release: “”We are delighted to have successfully completed our Listing on London Stock Exchange and we are proud to be the first London listed pan-African real estate group”. Earlier she was quoted saying the African real estate sector “offers some of the best returns in the global property market. We have a proven track record of generating income from our selective and diversified range of assets, built through our close and detailed understanding of the region’s property investment environment. The listing will support our aim to grow our portfolio further and become the leading real estate owner on the African continent outside South Africa.” The share price was set at net asset value and the aim is to yield 12% a year in US dollars.

Nigeria
The Federal Government of Nigeria listed a NGN10.7 billion ($29.5m) FGN Green Bond 2022 on the Nigerian Stock Exchange on 21 July. It offered a coupon of 13.48% and aims to finance initiatives including solar plants and hydropower.

South Africa
Anchor Capital became the 9th listing on the A2X Markets on 19 July through a secondary listing. It was listed on the Johannesburg Stock Exchange’s AltX platform in September 2016 after raising ZAR60m ($5.4m) through an IPO.

Mobile phone app for trading on Zimbabwe securities exchanges

Investors can check their portfolios and send orders to their stockbrokers on their smartphones in Zimbabwe with an app called C-Trade from today (4 July). C-Trade is an online and mobile trading platform for shares on the Zimbabwe Stock Exchange (ZSE) and the second licensed exchange, the Financial Securities Exchange (FINSEC).

According to an article in the Herald newspaper, C-Trade is for financial inclusion in Africa: “The platform will enable investors, both local and foreign to purchase securities from anywhere in the world anytime, using mobile devices. The initiative is being led by capital markets regulator, Securities Exchange Commission of Zimbabwe (SECZ), and seeks to promote financial inclusion by encouraging participation by the smallest retail investor.”

The Herald newspaper reported SECZ chief executive Tafadzwa Chinamo saying that President Emmerson Mnangagwa had agreed to launch the programme. “After that what you will be seeing more of is our campaign as SECZ to educate the public on what investing on the capital markets is about.”

“We have taken the issue of deepening and broadening the capital markets very seriously, to the extent that we added a new committee to our board of investor education.” In July 2017 Chinamo said SECZ had committed $300,000 to a campaign to get more people engaged in the capital market.

Escrow Systems headquartered in Zimbabwe has created the C-Trade programme to trade bonds and shares, using the same technology as Kenya’s world-first M-Akiba mobile Government bond sold on mobile phones to small investors in Kenya, from minimum denomination of $30. Here is our post on M-Akiba from October 2015 and a Reuters story on the eventual M-Akiba launch in March 2017.

According to a report in Newsday, Escrow Group chief executive officer Collen Tapfumaneyi said: “C-Trade is a mobile trading platform and is combination of a number of systems that enable investors to access the securities market or capital markets popularly known as the stock to enable people buy shares and all that. It comes in three forms, USSD application which can be utilised by mobile network subscribers. We have Econet and Telecel, but we are about to finalise with NetOne as well so within a few days all three will be on board,” It is not restricted to local mobile operators to enable foreign investors, including those in Diaspora.

Trading is still through a stockbroker, as before, says Chinamo of SECZ: ”This application is essentially sold to a stock broker to give the brokers clients access to the market. Rules of the exchange are still valid. For your trade to go through, it needs the authenticity of your broker so the broker is still liable for your trade, settlement, clearing and feed.”

The platform allows easier access for smart-phone users to manage their portfolios when they are away from a desktop/laptop.

Escrow is offering it on revenue-sharing basis to users with “minimal or no costs to market participants” according to an older news story in Financial Gazette.

According to an article today in Newsday, there are 13 licensed stock-broking firms in Zimbabwe, of which 3 signed up to use C-Trade. Escrow’s Tapfumaneyi said they were still talking about sharing fees: “C-Trade acts as an agent for the broker. The broker will still earn his full revenue according to the fee charged. However, the brokers pay a fee to use the platform which is negotiable.

“What we are basically doing is get business for them and they keep their traditional business. But, if we get people registering online and placing orders online, all that traffic is being channelled through to the brokers which then gets channelled to the exchange. So we are basically an extension of the brokers,” he said.

“These orders, when they come to the brokers, is also the issue of evaluation and trading is not just picking an order from a client and sending it through. You have got to analyse the market and advise the client what the pricing should be and all that. So we still have that interface.”

The target for C_Trade is about 20,000 individual participants by year-end and an ultimate goal of 2 million people.

London Stock Exchange financing African growth

African companies listed or trading on the London Stock Exchange have a total market capitalization of over $200 billion ($271bn), and in the last 10 years have raised more than $16 bn on London’s markets. The 108 African companies is more than any other international market, according to a press release from the LSE.

There are 9 African sovereign bonds listed in London, from: Gabon, Ghana, Namibia, Nigeria and Zambia

According to Tom Attenborough, Head of International Business Development, London Stock Exchange, in an LSE press release: “The success of Vivo Energy’s IPO is a strong statement of international investor interest in building exposure to Africa. As a London-listed company, Vivo Energy, will gain access to the world’s most international market, as well as an unrivalled source of deep liquidity and new investors.

“London is a strong partner to African companies seeking to attract international investment.”

Paternoster Square with London Stock Exchange at right (credit: Wikipedia)

  • Also this month, May 2018, Angola launched a $3bn Eurobond on LSE, the country’s biggest international bond and the first international issuance since 2015.
  • In April the LSE Group, the Nairobi Securities Exchange and non-governmental organization FSD Africa signed a memorandum of understanding to explore the launch of LSEG’s business support and capital-raising programme, ELITE. In May, the first Kenyan company, Olsuswa Energy, joined the programme. So far 850 companies have joined the ELITE programme.
  • In November 2017, the LSE, Casablanca Stock Exchange and the Bourse Régionale des Valeurs Mobilières (BRVM) signed an agreement to roll out ELITE across West African markets, in a signing ceremony presided by Amadou Gon Coulibaly, Prime Minister of Côte d’Ivoire.
  • In June 2017, Nigeria raised $300m through its first Diaspora Bond on LSE, a retail bond aimed at Nigeria’s global expatriate community seeking to invest in their home country’s development. It was the first bond of its kind from sub-Saharan Africa.
  • In March 2017, LSE published its first “Companies to Inspire Africa” report, identifying hundreds of the fastest-growing and most dynamic private businesses across Africa. Vivo Energy is the first company in that report to follow up by listing on LSE.
  • In March 2016, LSEG established an Africa Advisory Group, bringing together 12 distinguished business leaders, policymakers and investors from across Africa, to discuss the challenges and opportunities presented by the development of the continent’s capital markets.
  • In November 2014, London Stock Exchange Group and The Nigerian Stock Exchange signed a capital markets agreement to support African companies seeking dual listings in London and Lagos. The agreement followed the implementation earlier in 2014 of a unique new cross-border settlement process between the UK and Nigeria.
  • In June 2014, LSEG signed a strategic agreement with Casablanca Stock Exchange to share its expertise on the full exchange business chain, from listing to trading, and from clearing to settlement and custody with a commitment to position Casablanca’s capital markets and financial infrastructure as a regional hub.
  • In April 2014, Nigerian oil and gas group Seplat was the first Nigerian company to simultaneously dual list equity shares in London and Nigeria and raised $500m in an IPO.

LSEG market infrastructure technology, supplied by Millennium IT of Sri Lanka, is deployed in more 12 African markets, including Botswana, Casablanca, Namibia and Johannesburg stock exchanges.

Sub-Saharan Africa investment banking deals in Q1

Mergers and acquisitions (M&A) in sub-Saharan Africa in Q1 of 2018 at $4.7 billion were 63% down on a year earlier, according to investment banking analysis for sub-Saharan Africa by Thomson Reuters, but there were $2.7bn in equity follow-on issues and $13bn in debt issues. Rand Merchant Bank topped the ranking of investment banking earnings, gaining $10.3 million, 9.3% of the total $117.6m earned during the quarter.

Completed M&A generated 20% and equity capital markets 37% of the total fee pool. Thomson Reuters says equity and related issuance was at its highest since 2007.

Fees from completed M&A totaled $23.4m, a 57% decrease year-on-year, while equity capital markets underwriting reached $43.1m, the best start since 2007. Domestic and inter-SSA M&A totaled $483m, down 81% year-on-year and the lowest annual start since 2006. Inbound M&A is down 73%, driven by the lowest number of deals since 2004, while outbound M&A is on a six-year high, up 91% to $1.6bn. Most (93%) of the outbound M&A was by South African companies, while acquisitions by companies headquartered in Mauritius accounted for 6% and in Seychelles for 1% respectively. Citi topped the financial advisor table for Q1 2018 for announced M&A with “any sub-Saharan Africa involvement” with 7% market share.

The biggest deal of Q1, according to Thomson Reuters, was Milost Global Inc’s US$1.1bn leveraged buyout transaction to acquire the entire share capital of Primewaterview Holdings Nigeria through its African subsidiary Isilo Capital Partners, announced on 10 January.

All the equity capital markets activity in the region was follow-on offerings, with 14 transactions. It is the first time there were no primary equity issues since 2012. The biggest was a follow-on offering by PSG Group, followed by offers from Sanlam and Lafarge Africa. Standard Bank Group tops the SSA equity capital markets league table in Q1 2018 with a 26% share of the market, followed by Investec at 12% and PSG Capital Ltd at 11%.

Sneha Shah, Managing Director for Africa at Thomson Reuters, said: “The most active Sub-Saharan Africa equity capital markets sectors for Q1 2018 were financials followed by materials, real estate, industrials, retail, and consumer staples.”

The most active debt issuer nation was Côte d’Ivoire with US$4.6bn in bond proceeds, 36% of market activity, followed by Nigeria and Senegal. Citi took the top spot in the SSA bond ranking for Q1 2018 with 24% market share. Syndicated lending fees declined, falling to $12.7m down 66% from Q1 2017. ING ranked first for syndicated loans.

Fees from underwriting in debt capital markets were $38.4m, the top value since Thomson Reuters started keeping these records in 2000, and up from $19.4m during Q1 2017.

AfDB and stock exchanges group ASEA sign MoU for capital markets projects

Africa’s leading financial institution, the African Development Bank (AfDB), is pairing with the African Securities Exchanges Association (ASEA) to deepen and connect Africa’s financial markets. The partnership aims to help mobilize more resources to drive growth.
The two will work on projects of mutual interest such as developing financial-markets infrastructure, introducing new products, improving market liquidity and participation, information-sharing and capacity-building. AfDB and ASEA signed a 5-year memorandum of understanding on 11 July. This provides “a collaborative framework for harmonizing and coordinating the efforts”, according to an AfDB press release.
The Bank and ASEA have already started successfully collaborating on the African Exchanges Linkage Project, which they co-initiated to improve liquidity and foster greater investments and trading across markets. This aims to link key regional markets and has proposed Casablanca, Johannesburg, Nairobi and Nigerian stock exchanges as regional hubs, according to project documents.

AfDB and ASEA Executive Committee delegation. (From left to right) Stefan Nalletamby (Vice-President for infrastructure, regional integration and private sector, AfDB), Geoffrey Odundo (CEO of Nairobi Securities Exchange), Oscar Onyema OON (CEO of Nigerian Stock Exchange), Akinwumi A. Adesina (President of AfDB), Karim Hajji (CEO of Casablanca Stock Exchange), Edoh Kossi Amenounve (CEO of BRVM) Photo: AfDB

AfDB and ASEA Executive Committee delegation. (From left to right) Stefan Nalletamby (Vice-President for infrastructure, regional integration and private sector AfDB), Geoffrey Odundo (CEO of Nairobi Securities Exchange), Oscar Onyema OON (CEO of Nigerian Stock Exchange), Akinwumi A. Adesina (President of AfDB), Karim Hajji (CEO of Casablanca Stock Exchange), Edoh Kossi Amenounve (CEO of BRVM) Photo: AfDB

AfDB President, Akinwumi A. Adesina says deepening and integrating Africa’s financial markets to mobilize domestic resources to fund African economies is very important to deliver the Bank’s “High 5s” priorities: Light up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the Quality of Life of Africans (all part of the bank’s 2030 agenda for attaining the global Sustainable Development Goals – SDGs).
He says there are huge pools of capital available in sovereign-wealth, pensions and insurance funds and these can be used for developing Africa through appropriate intermediation and capital-markets products. He called for “increased mobilization of domestic pools of savings and support for small and medium enterprises (SMEs), as they constitute the bulk of Africa’s private sector.”
Adesina pointed to the bank’s progress in financial markets development through issuing and listing local-currency bonds in Uganda, Nigeria and South Africa. The bank has also created African Financial Markets Initiative (AFMI) to support domestic bond markets through the African Financial Markets Database. The bank will soon launch an African Domestic Bond Fund building on the success of the AFDB Bloomberg® African Bond Index, which started in February 2015 to combine the Bloomberg South Africa, Egypt, Nigeria and Kenya local-currency sovereign indices and was expanded in October 2015 by Botswana and Namibia..
ASEA President, Oscar N. Onyema, CEO of the Nigerian Stock Exchange, says the MoU will frame projects focused on the development of exchanges, deepening the stock markets and ultimately fueling African economic growth.

IFC raises N$180m bond in Namibia

Photo credit: Namibian Sun www.namibiansun.com

Photo credit: Namibian Sun www.namibiansun.com

The International Finance Corporation, part of the World Bank Group, has continued its programme of helping develop African debt markets by launching the first bond by a non-resident issuer in Namibia. It raised NAD 180 million (about $12m) which it will use for private sector development in the country. The bond yield is 9.812% per annum.

The 5-year bond is named “Namib” after the world’s oldest desert. The bond is part of a medium-term note programme registered with the Namibian Stock Exchange that allows IFC to issue up to NAD 10 billion (approximately $650m) in bonds in the domestic market. Standard Bank and IJG Securities (Pty) Ltd are lead managers for the bond issuance. IJG Securities is also the sponsoring broker on the transaction, while Standard Bank and Transfer Secretaries (Pty) Ltd are fiscal agents.

The bond is issued under IFC’s Pan-African Domestic Medium Term Note Programme, which was launched in May 2012 to support capital-market development in the region. The IFC has already issued local-currency bonds in Rwanda and Zambia, and 9 countries are part of the programme.

Jingdong Hua, IFC Vice President and Treasurer, said: “Deep, vibrant capital markets create access to long-term, local-currency finance for the private companies so they can get tailor-made financing for growth and expansion. The IFC Namib bond is an integral part of IFC’s strategy to support Africa’s capital market development and create access to finance for the region’s private sector.”

IFC supports local capital market development in Africa by working with governments, regulators and market authorities to put in place frameworks that encourage market entry by domestic and international issuers. IFC also supports African companies looking to access capital markets.

More recently, IFC launched a new capacity-building programme for African capital market regulators and practitioners. This is a partnership with the Milken Institute and George Washington University and will create a network of experts and advocates to support the region’s capital markets.

Ipumbu Shiimi, Governor of the Bank of Namibia, said: “Developing Namibia’s capital markets will be critical for long-term economic development, and especially for the expansion of the infrastructure and banking sectors. We hope that other international and domestic issuers will follow IFC and connect savings to Namibia’s private sector investment needs.”

IFC issues bonds denominated in local currencies in emerging markets as part of its regular programme of raising funds for private-sector development, and to support the development of domestic capital markets. In many cases IFC is the first, or among the first, non-resident issuer in a domestic market. IFC bonds are rated triple-A by Moody’s Investors Service and Standard & Poor’s.