African Capital Markets News » Ghana

Investors back $ billions of African bonds

Tom Minney — Mon, 31 May 2010 15:46:26 +0000

Interest in African sovereign debt has been climbing again in recent months. Angola has stil not issued a $1 billion – $2 billion benchmark bond due in May. However, Kenya, Nigeria and Mauritius and many other countries have flourishing debt markets and international interest is good in high-yielding hard-currency bonds such as those issued by the Republic of Congo and Cote d’Ivoire.
In April top bond broker Exotix (www.exotix.co.uk) gave a “buy” recommendation on the REPCON 2.5% bond, redeemable in 2029. Then it was trading at 57.0 and offered a yield of 10.8% and was the highest-performing African sovereign bond.
Trading in $2.4 billion of Cote d’Ivoire debt in US dollars trading under New York law (2.5%, redeemable in 2032) began in mid-April, after the country exchanged it for Brady bonds it had defaulted on nearly a decade ago. Exotix only rates it a “hold” at 64.2 in mid-April, when it yielded 9.6%. The bond was expected to make up 0.75% of the $400bn Emerging Market Bond Index (EMBI), according to a recent article in The Banker, and many were expected to buy it for this reason. Exotix commentary on the bond included detailed assessment of politics and economic developments including current account surpluses and International Monetary Fund assessments.
Governments in some countries are seeking to create longer-term yield curves for domestic investors, in order to provide a framework for longer-term finance and investment. For instance Barclays Kenya is offering 20-year mortgages, compared to a few years ago when the limit was 5 years. Bonds are also being moved into electronic trading and being handled by central depositories.
According to a report on 19 May on Bloomberg, Angola was awarded credit ratings of B+ by Standard &Poors and Fitch, 4 levels below investment grade, and Moody’s assigned an equivalent ranking of B1, putting Angola on par with Nigeria, Lebanon, Belarus and Ghana. The country plans to issue $1billion – $2 billion in bonds this year.
Other high-yield bonds, including in local currencies, can be found in Tanzania, Zambia, Ghana and Kenya. Economic commentators are encouraged, as debt can be a more cost effective way to fuel long-term economic growth than equity.
Better economic management and good investor interest in government debt has paved the way for more corporate bonds, including for power and telecommunications infrastructure. This site has already reported how Kengen and Nampower have issued bonds to fund urgently needed power expansion. Telecommunications giant Safaricom has also been successful.
The successes are tribute to the increasing quality of economic and fiscal management by African governments.

Exotix says Ghana index was worst of 2009 but may jump 30% in 2010

Tom Minney — Sat, 19 Dec 2009 12:40:20 +0000

Stockbroker and investment bank Exotix Limited (www.exotix.co.uk) says the Ghana Stock Exchange’s All-Share Index has so far been the world’s worst performer in 2009, falling 49% after being among world beaters in 2008 with a 58% gain.
London-based Exotix analyst Christopher Hartland-Peel says the index is likely to climb 25% to 30% in 2010 as the west African nation starts producing oil for export, according to Bloomberg.
“We view Ghana as one of the countries that are going to be among the strongest growing” in Africa, Bloomberg quotes Hartland-Peel. “The reason for this is oil.”
GSE share prices plummeted as international investors fled assets perceived as risky during the height of the global credit crisis, and 15% depreciation in the currency (cedi) triggered 20% inflation and a $1 billion rescue by the International Monetary Fund.
Ghana’s Jubilee oil field was discovered in 2007 and is scheduled to start production in the fourth quarter of 2010. Tullow Oil Plc, which owns a 34.7% stake, says the field may hold as much as 1.8 billion barrels of oil, with initial production estimated at 120,000 barrels a day. The firm adds that Ghana will be one of the world’s top 50 oil producers.
Currency depreciation and consumer price inflation helped double yields on Ghana’s 91-day Treasury bills compared to a year earlier, reaching 24.7% before declining slightly. Hartland-Peel says stocks won’t rebound until an economic recovery reduces bond yields: “If you can get 23%-24% in Treasury bills, why put your money in the stock market?”
The central bank in November cut its key lending rate for the first time in nearly three years by 50 basis points to 18%. Further cuts may follow after consumer inflation fell for the fifth straight month to 16.9% in November.
Finance Minister Kwabena Duffuor reportedly said the budget deficit will fall to about 10.2% in 2009 and 7.5% in 2010, from the 2008 peak of 24.2%. Economic growth will likely reach 5.9% in 2009 and 6.5% in 2010, after 7.3% in 2008.
The cedi has gained nearly 5% against the dollar since the International Monetary Fund agreed in July to lend Ghana $1.02 billion over 3 years. Stocks may also benefit from 1 bln. cedis set to be invested in Ghana’s securities markets through a government pension-reform programme starting next year, allowing private brokers to develop and manage corporate retirement plans.

JSE’s Africa Board: more travels and consultations

Tom Minney — Sat, 22 Aug 2009 09:37:34 +0000

The Johannesburg Stock Exchange reports that it is satisfied with progress on its Africa Board, which aims to attract leading African companies to dual list their securities. The team has three more countries in its first year programme, building links with leading issuers, regulators, brokers and African exchanges.

The Board was launched on 19 February 2009 with its first listing, Trustco Group Holdings, a Namibian microfinance and insurance company also listed on the Namibian Stock Exchange.

In a recent email, the Africa Board management told www.africancapitalmarketsnews.com that the aim of the first year was to continue consultations with key market players. Since February, the team has visited Zimbabwe, Zambia, Kenya, Tanzania and Ivory Coast. On the future itinerary are Ghana, Nigeria and Angola. The team are establishing relationships with stock exchanges, regulators, stockbrokers and targeted issuers.

The team says their aim is “to establish how the Africa Board can work for the benefit of all parties involved”. According to the email: “In the next six months these trips will continue, with much the same agenda, and we are hopeful that in the course of next year, there will be further listings on the Africa Board.”

African capital markets conference in September

Tom Minney — Tue, 04 Aug 2009 19:43:08 +0000

A Regional Capital Markets Conference for Africa is to be held next month under the theme: “Towards effective regulation and development of an efficient capital markets in Africa”. The conference is sponsored by hosted by Ghana’s Securities and Exchange Commission (SEC) and sponsored by the US Agency for International Development and the US SEC.

The agenda includes current capital markets development issues in Africa, including regulatory issues since the financial crisis. The meeting will be in Accra, Ghana, from 14-18 September. Regulators from insurance, banking, and securities are expected, as well as experts from Uganda, Cameroon, South Africa, Ethiopia, Ghana, Nigeria, US, UK and other parts of the world.

A key speaker is Dr Eleni Z. Gabre-Madhin, CEO of the Ethiopian Commodity Exchange on ‘Commodities Sector in Africa: Opportunities and challenges of developing a viable commodities market in Africa”. Another will be Dr Robert M. Fisher, assistant director in the US SEC’s Office of International Affairs on “Challenges of securities regulation in emerging markets”.

Ghana’s SEC will also host Middle East and African Regulators in a conference due in 2010, while the Ghana Stock exchange hosted the 11th African Securities Exchange Association (ASEA) conference in 2007 for the theme: “African Capital Markets: The next investment frontier”.