Archive for the 'Senegal' Category

Africa’s eurobond outlook 2019

A good overview of Africa’s  $92bn eurobond market, with a summary of 2018 and 5 key themes for 2019, written by Gregory Smith, Director and Fixed Income Strategist for Emerging Markets at Renaissance Capital, is available on LinkedIn.

Overall there are 20 African eurobond issuers with the largest issuers South Africa, Egypt and Nigeria, also Africa’s 3 largest economies.

About 2018, he wrote: “Despite the tough markets 2018 was a record year for African sovereign issuance and saw a growing preference for euro-denominated eurobonds, and longer maturity eurobonds. The $25.8 billion issued by African countries in 2018 makes up 28% of the current stock of African eurobonds. Angola, Egypt, Ghana, Ivory Coast, Kenya, Nigeria, Senegal and South Africa each issued 30-year paper.”

Source: Renaissance Capital

As highlighted previously, there were 2 upgrades in credit ratings for Eurobond issuers during 2018. S&P upgraded Ghana and Republic of Congo. However, Moody’s downgraded 5 countries: Angola, Kenya, Gabon, Tunisia and S&P and Fitch joined in downgrading Zambia.

Key trends Smith focuses on for 2019:

  1. International market turbulence is the top trend. It will be good news for many African countries if the US dollar gets weaker internationally and the US Federal Reserve holds back from raising US interest rates as much as previously anticipated. But there are global downside risks to issuers, including lower global growth impacted by strained US-China relations.
  2. Will key issuers make enough progress with economic reforms? Reforms such as lower deficits and adequate foreign exchange reserves are needed to support economic growth and make the debt sustainable. If markets get tough in 2019 (see previous), reforming economies do best. Check Smith’s list of 10 African Eurobond issuers busy with reform programmes under guidance of the International Monetary Fund (IMF) and the 2 issuers, Zambia and Republic of Congo, still talking but not ready to start IMF programmes.
  3. Policymakers’ skills at managing their debt, particularly as a period of heavy bond repayments begins in 2022 and remains high until 2025. Strong debt management skills include “economic policy coordination, an understanding of debt risks, a debt strategy, good data management, regular public reporting, good investor communication, a skilled team that can negotiate good terms with potential global lenders” as well as redeeming some debt ahead of maturity by longer term issues
  4. Elections in eurobond issuers this year (in approximate date order): Nigeria, Senegal, South Africa, Mozambique, Tunisia and Namibia.
  5. This year is unlikely to see as many eurobonds issued as last year. “Those most likely to issue in 2019 include Egypt, Angola, Ghana, and Kenya”.

For deeper analysis and more details and charts, see the original posting on LinkedIn here.

 NB Gregory Smith points out his views are for information, they do not constitute investment advice.

BRVM investment open days – 14 March Johannesburg

BRVM in Abidjan (photo Tom Minney African Capital Markets News)

One of the world’s most successful regional stock exchanges, linking eight West African countries with a stable currency and fast growth, will come to South Africa to outline investment opportunities. The Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in investment destination Côte d’Ivoire, will meet South African fund managers and market experts on March 14 at “BRVM Investment Days in Johannesburg”. This exclusive investor forum is part of a global 2018 BRVM roadshow.

Edoh Kossi Amenounve, CEO of the BRVM, will outline strategic developments on the exchange, including: investor-friendly trading and disclosure, working with London and Casablanca stock exchanges to boost growth companies in the region, and a board for mining companies after big discoveries in the region.

Other speakers are:
• Dominic Bruynseels, Regional CEO West Africa for Standard Bank, which sees the potential for growth in the West African Economic and Monetary Union (WAEMU) region and opened its first branch in Côte d’Ivoire in August 2017
• Samira Mensah, Associate Director of Standard & Poor’s Global Ratings, with an overview of banks in the region as well as fixed income and other securities
• Michael Barnes, Head of Sales and Trading at stockbroker African Alliance, one of the leading South African stockbrokers for trading on the BRVM exchange.

The speakers will share insights on the economies – the IMF forecasts growth at 6.5% or 6.6% a year across the region until 2021 – and on sectors, shares and key investment themes. It is a unique opportunity for South African institutions to learn more about the potential of Africa as regional links become stronger.

WAEMU combines eight West African countries with a population of 110 million: Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. WAEMU shares a single currency, the CFA franc, which is linked to the value of the euro (EUR), and a single central bank and capital markets regulator.

Mr Amenounve says: “South African investors are taking increasing interest in the opportunities in Africa as the world’s long-term growth story. The West African region offers fast, diversified growth and interesting lessons on regional development and economic linkages. In our countries, demographics, development, technology and increasing productivity all offer opportunities and the regulated exchange market offers liquidity and support to investors.”

The BRVM has 45 listed companies and is Africa’s sixth biggest exchange in terms of market capitalization with $12.5 billion in shares listed at end December 2017, plus 32 government and corporate bonds and five sukuk. To register online, please visit

Contact person for all event-related questions: Ms. Aziza Albou Traore Tel: +1 646 3772178
For any event-related or media enquiries, please contact: Ms. Glynis Loizeau: Tel: +33-6-83-48-75-85

This event is organized by AZ Media Agency
Twitter @BRVM_UEMOA #BRVMInvestmentDays

Rise of pension giants set to transform investment in Africa

New giants are arising in African investments – the domestic pension funds. In Nigeria the National Pensions Commission (PenCom) estimated registered pensions to be worth US$14bn in June 2011, with asset values up by 8% in three months; Namibia’s Government Institutions Pension Fund alone is worth some $6bn; South Africa’s pension funds grew at a compound annual growth rate of 14.3% in US dollar terms over 10 years to December 2010, including over 28% in 2010 and Tanzania’s pension industry was audited at $2.1bn for 2010, and growing by 25% a year.

The number of pensioners is set to soar, according to United Nations figures, as the number of people over 60 years in Africa will rise from 55m in 2010 to 213m by 2050, compared to 236m Europeans over 60 years old by 2050. Current pension funds cover only 5%-10% of Africans ranging from 3% in Niger but it used to be 80% in North African countries such as Egypt, Libya and Tunisia. Pensions are not available at all in some countries.

Regulatory reforms are driving the growth of African pensions. Recent reformers include Cote d’Ivoire, Gabon, Kenya, Nigeria, Senegal and Uganda. Ghana created a National Pensions Authority with a 2010 act. Reform in Kenya, including investment guidelines and a new regulator, resulted in strong growth and good investment returns. Tanzania passed the Social Security Regulatory Act in 2008. The rising pension industry is likely to boost fund management and equity industries, exits for private equity and even to fill some of the $45bn annual funding gap for infrastructure. For instance, In January 2012, Tanzania’s National Social Security Fund signed an agreement to finance 60% of the $137m cost of building Kigamboni Bridge. South Africa’s $130bn Government Employees Pension Fund is a major investor in the Pan-African Infrastructure Development Fund which raised $625m in 2007 and is targeting $1bn on its second offering.

For more details on Africa’s pension industry, please check my article published in The Africa Report magazine and website, here is the link and for brief profiles of 6 giant African funds, check here.

Senegal bond ratings comparisons with similar maturity bonds

Want to get an idea how the Senegal bond compares with the others? Exotix ( is one of the leaders when it comes to Emerging Markets bonds. In this table they give you the lowdown:


Size (US$m)    Mdur   Yield(mid)    Moody’s S&P Fitch

Senegal                                                                                                B1             B+     NR

Gabon 8.2% 2017           879                      5.2        5.344               NR           BB‐     BB
Ghana 8.5% 2017            750                     5.1         6.036              NR           B          B+
Nigeria 6.75% 2021       500                     7.2         6.165              NR            B+      BB

Sri Lanka 6.25% 2020   1000                  7.2          6.16               B1              B+       B+
Vietnam 6.75% 2020    1000                 6.7           6.015            B1              BB‐      B+
Lebanon 8.25% 2021     2092                 7.2           6.253            B1              B          B
Georgia 6.875% 2021    500                   7.3           6.953            Ba3            B+      B+
Ukraine 7.95% 2021      1500                 6.9            7.195           B2               B+      B
Dom Rep 7.5% 2021       750                  6.7             6.752          B1                B         B

Source: Bloomberg, Exotix. Close 4 May 2011.

Senegal’s $500m Eurobond offers good yield

Senegal has successfully re-priced its yield curve by issuing a more liquid 10-year $500 million Eurobond carrying a coupon of 8.75%. The bond was priced at 97.57 when it was bid on 6 May, the equivalent of a yield of 9.125%. Standard Bank noted it represented a spread of 596 basis points over comparable US Treasuries.
Senegal is rated B+ by Standard & Poors and B1 by Moody’s.
Samir Gadio of Standard Bank Research says the bond attracted a lot of interest, with final demand reaching $2.4 billion. In trading after the issue the mid-price climbed to around 102.75 on 11 May, representing a yield of 8.3% and spread of 508 bps. He adds in an investor note; “further upside is probable as the bond is likely to be included in the EMBI index in late May”.
Stuart Culverhouse of broker Exotix also tips the bond as one to watch: “There are not many places to get 9% yields these days. But we also think it overstates Senegal’s credit risk. We think the offer gives intrinsic value. Moreover, with the new issue likely meeting eligibility criteria for index inclusion (e.g. in the EMBIG) we expect there would be additional technical support for the new bond.
“We think Senegal’s credit fundamentals compare favourably with other B+ rated sovereigns. We think the new bond will offer good value compared to similarly rated peers (eg Ghana and Nigeria) with 200bps-plus upside.”
The bond replaces a $200m 8.75% bond due in 2014 which will be entirely retired. Gadio says the transaction helped significantly reduce Senegal’s credit spread by nearly 100 bps, even as the country extended its yield curve. He says “political risks remain relatively limited ahead of the 2012 general elections”, especially as Senegal’s democratisation process was initiated in the mid-1970s.
Senegal is part of the West African Economic and Monetary Union grouping of 8 West Afrian states formed in 1994, and uses the CFA Franc (XOF) currency linked to the Euro. As a WAEMU country, Senegal cannot independently determine its monetary policy. Gadio says, the Banque Central des Etats de l’Afrique de l’Ouest (regional central bank has historically been conservative in its money supply objectives, ensuring a low core inflation and interest rate environment. “The two main economic constraints remain a large current account deficit and a relatively sizeable fiscal deficit, even as public debt is sustainable.”

BRVM flees war and restarts trading from Mali

West Africa’s regional stock market the Bourse Regionale des Valeurs Mobilieres ( has started trading from a new base in Bamako, Mali, after leaving Cote d’Ivoire because of the political crisis. Trading restarted in the new office on 1 March, reports Bloomberg news agency, but volumes are much lower.
The bourse suspended operations on 11 February, after security forces loyal to incumbent Cote d’Ivoire president Laurent Gbagbo seized its main offices in Abidjan to prevent it relocating. Once senior personnel were safely out, the BRVM managed to move enough of the settlement and clearing operations to start operating in the new offices. At least 10 commercial banks in Cote d’Ivoire closed and Gbagbo’s forces “nationalized” them.
Bloomberg says that it is only operating for foreign investors since most of the stockbrokers were based in Cote d’Ivoire and their offices were part of the closed banks. However stockbroker Securities Africa says that only locals can trade. Clearing and settlement would also require banks, although the BRVM has an associated regional central depository Dépositaire Central/Banque de Règlement S.A.
The political crisis in Cote d’Ivoire is getting closer to civil war. International bodies including regional grouping ECOWAS and the African Union says that opposition leader Alassane Ouattara, won a 28 November presidential election and is the legal president of the country, but Gbagbo refuses to accept the verdict. The United Nations says that almost 400 people have been killed and tens of thousands have fled. The economy has virtually stopped, with all financial systems, and Cote d’Ivoire’s €2.3 billion Eurobond went into default on 30 January.
The BRVM lists some 39 securities and acts as the regional exchange for 8 countries as an African innovation when it opened in 1998. Bloomberg reports BRVM head Jean-Paul Gillet saying that the value of trading on 15 March was CFA 86 million (US$182,300), down from a daily average of CFA 200 mn to CFA 500 mn in 2010: “We managed to restart the operations of the bourse after we reconstructed the system and the environment. The volume of transactions has been a bit affected, but the prices haven’t dropped as there has been no haste in selling.
“Given the situation in the country, Ivorian companies face difficulties in taking part in trading, so we mostly have international clients at the moment. Companies can’t work from Abidjan because members of their staff are missing or their offices are closed.”
Stockbroker Securities Africa lists the market capital of the BRVM at CFA 3.5 trillion CFA francs. Sonatel (SNTS), Sonatel, based in Senegal and including France Telecom as a shareholder, is the biggest listed company with CFA 1.65 trn in market capitalization. Other listings include 8 banks, including SGBCI (Societe Generale SA) and Ecobank Transnational Inc. Ivorian companies make up 33 of the 39 listings, according to BRVM website, and the BRVM Composite Index peaked at 174.89 on 11 Jan, but has since fallen 7.5%, in line with many emerging markets indices.