Tag Archives: bonds
bonds: Latest News
Kurt Davis Jr., 2:00 am AFKI Original
Short-term volatility and uncertainty in the African growth story create opportunities for hedge funds. Hedge funds generally operate more flexibly than private equity, and they have the creativity to generate bond-like returns that outpace inflation. Critics say hedge funds have limited liquidity in an opaque world. The riskiest play — but with big returns — is in agriculture and land. Where land is for sale in Africa, investors are making a play for a limited resource, especially when it’s arable, ripe for production or ideal for commercial and residential construction.
Reuters, 12:25 pm
Fitch said Zuma’s recent cabinet reshuffle will likely result in new economic policy. Downgrades to junk — first by S&P on Monday and today by Fitch — could see South Africa fall off some global bond indexes. This may force international funds that are prohibited from holding sub-investment grade securities to sell. There is still is a huge wealth gap between blacks and whites, Zuma said in his SONA address. Zuma’s presidency has been riddled with corruption accusations and money-related scandals. He has called for radical economic transformation.
Dana Sanchez, 10:34 am
S&P is the first agency to downgrade South Africa’s sovereign debt to non-investment grade. SA’s banks have proved that they can weather storms. “We have 50 percent more capital than in the global financial crisis and all South African banks came through that event fine,” a stakeholder said. March was a record month for trading volume in SA bonds. S&P’s decision doesn’t impact SA’s eligibility in global bond indices yet. But more ratings downgrades and increased trading volumes could. “The real issue is the impact on economic growth, industrial performance and employment,” a wealth manager said. “There is a negative relationship between economic growth and bank assets.”
Staff, 9:43 am
South Africa could lose its coveted investment-grade rating because of low growth and limited progress toward structural reforms. Nonresidents hold more than a third of all outstanding government bonds. Central Bank of Nigeria cut interest rates from 13% to 11%, but investors say that the easing of monetary policy will have little effect on the real economy. Nigeria must devalue the naira from its current level to battle above-target inflation, deal with a current-account deficit, and boost security and foreign policy.
Dana Sanchez, 4:14 pm
Pravin Gordhan is South Africa’s third finance minister in a week. He’s back on the job he held from 2009 to 2014. Zuma’s timing, leadership and judgement in firing former minister Nene drew criticism from citizens on social media, opposition parties and the financial community. Zuma said the people spoke and he listened. The rand recovered by nearly 5% Sunday and another 4% Monday. Bonds also responded positively.
Dana Sanchez, 3:53 pm
“Gold medal for bad timing.”
“Headed for a bailout.”
These are a few of the things people are saying after Zuma removed his respected finance minister from office with no explanation. His decision is being tried in the court of public opinion. What will get South Africa out of this mess is a revolt in the ruling ANC that challenges Zuma to explain his actions, says Prof. Mzukisi Qobo. Voters should “rebuke government for its shambolic management of the economy.”
Staff, 12:01 am
Rock stars helped convince the international community to write off more than $100 billion of African government borrowing a decade ago. Now the big debts are back, and it’s getting tougher to pay them off. Investors and analysts complained when Ghana put the $1 billion from a eurobond offering last year largely toward day-to-day expenses such as salaries for public employees instead of projects that could speed growth and create jobs.
Kurt Davis Jr., 10:59 pm AFKI Original
Islamic finance in Africa is in its early stages but the potential is garnering huge attention from financiers, due in part to the demographic realities of Africa. Nearly half the African countries have Muslims populations that account for 40 percent or more of the total. Several African countries are planning sukuk debuts — the Islamic equivalent of a bond. Arab leaders are more than willing to share in the profits of infrastructure projects in Africa.
Anna B. Wroblewska, 3:32 am AFKI Original
Islamic finance is expanding globally, and Africa seems a natural outlet for that growth. With low access to banking and a huge need for finance, Africa presents an interesting outlet for Islamic finance and banking institutions. Africa, like the Middle East, has relatively low levels of financial inclusion, similarly to the Middle East, and a significant minority of Muslims. To find out if Islamic banks could fulfill an unmet need, a group of International Monetary Fund economists asked whether these banks could help foster financial access and conducted a study to find out.
Makula Dunbar, 5:32 pm
CBZ Holdings Ltd., Zimbabwe’s biggest bank, will sell $200 million of bonds backed by Africa Export Import Bank, CBZ Chief Executive Officer Never Nyemudzo said. Afreximbank will underwrite the debt, which will pay a coupon of 7 percent, Nyemudzo said in an interview in Zimbabwe’s capital Harare on Aug. 14.
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