GTR Africa - Trade and export finance conference’s Post

The high interest rate environment and reticence to lend among global banks and #FIs remains a particular challenge for Africa, however the return of #Eurobond issuances is a welcome dose of optimism to bond and investor appetite, and Common Framework debt restructuring continues to offer respite to debt distressed economies. Structural factors to debt serviceability remain however, from credit downgrades and rising external debt stocks to high borrowing yields on Eurobonds. With challenges to sovereign financing and debt management increasingly multifaceted, this session at #GTRAfrica featuring esteemed panel members John Lentaigne (Tysers), Michael Doran (DLA Piper), Sujithav Sarangi (Standard Chartered) and Werner Grub (EIFO) will examine reform priorities to sovereign debt architecture and what banks, multilaterals, and African governments would like to see from capital market reform. Topics of discussion include: 🔄 What was successful from recent restructuring deals and how these could be applied to future debt reform 💵 Trajectory of the ‘Africa Premium’ 🌐 A wish list for the reform of global sovereign credit architecture 🔗 How African nations can optimise debt sustainability against the spread of volatile commodity prices, hard currency liquidity shortages and political risk Join over 500 industry leaders, corporates and financiers on November 14 at the UK’s leading event charting Africa’s #trade, #export and #infrastructure trajectory from #London.     📅 Secure your place: https://lnkd.in/df6hRHCp 👉 Visit https://lnkd.in/dBDDru9d or contact bookings@gtreview.com for more information. #GTRAfrica #TradeFinance #ExportFinance #InfrastructureFinance #SovereignDebt #DebtResturcturing

Despite initial concerns about the ability of countries with low credit ratings to access bond markets, the first quarter of the year witnessed a record issuance of hard-currency bonds by emerging-market sovereigns. Notably, countries such as Côte d’Ivoire, Bahrain, Benin, and Kenya have successfully tapped into these markets, indicating a renewed avenue for liquidity. However, the high coupon rates accompanying these bonds raise apprehensions among private-sector bondholders, who fear a potential surge in sovereign debt restructurings. While absolute yields exceeding 10% may seem alarming, historical data and ongoing negotiations, such as Zambia's debt restructuring deal, provide some optimism regarding the resolution of sovereign defaults. Despite the complexity and idiosyncrasies inherent in such negotiations, the reopening of markets and additional support from institutions like the IMF signal a promising trajectory for lower-rated sovereign borrowers in emerging markets. This resurgence not only underscores the resilience of these markets but also invites further examination of the intricacies of sovereign-debt contracts and restructuring mechanisms. Source - https://lnkd.in/e_92SZNs #Finance #SovereignBonds #EmergingMarkets #DebtRestructuring

Yet another REDD forward looking scoop! Last week, Giovanni Riva revealed how the governments of Nigeria and Angola are exploring the possibility of holding non-deal roadshows to discuss their debt strategies for 2024 during the upcoming IMF Spring Meetings in Washington DC. This move comes as both countries are eyeing Eurobond issuances, with Angola planning a USD 300m Eurobond as part of its 2024 debt strategy   Despite the early stages of planning and lack of confirmation, this initiative signals a proactive approach to leveraging the favorable funding window for African sovereigns, highlighted by Nigeria's keen interest following successful debt issues by Cote d’Ivoire, Benin, and Kenya.    Stay tuned with www.reddintelligence.com for more updates on how these discussions during the IMF Spring Meetings could shape the financial strategies of Nigeria and Angola.    #imf #africa #sovereigndebt #distresseddebt #reddintelligence

📈𝗘𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗗𝗲𝗯𝘁 𝗣𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁 𝗶𝗻 𝗠𝗮𝗿𝗰𝗵 Cbonds is excited to share our latest review of initial public debt offerings for March. In March of this year, the local sovereign debt markets of EM countries witnessed notable developments. 🌏In 𝗔𝗳𝗿𝗶𝗰𝗮, stability prevailed with minimal fluctuations in government bond borrowing volumes. 🌏Meanwhile, the 𝗠𝗶𝗱𝗱𝗹𝗲 𝗘𝗮𝘀𝘁 saw a decrease in borrowing pace in major economies like Turkey and Saudi Arabia compared to the previous month. 🌏𝗟𝗮𝘁𝗶𝗻 𝗔𝗺𝗲𝗿𝗶𝗰𝗮 experienced a surge in domestic Argentine government bond placements as part of the country's sovereign debt restructuring. Brazil saw a slight increase in placements, while other countries in the region reported decreased borrowing activity. 🌏In 𝗔𝘀𝗶𝗮, India, typically ranked second behind China, did not place any government bonds with maturities over 1 year in March due to the end of the financial year and exhaustion of planned borrowing. On the other hand, China increased the volume of local government securities placements, while other countries in the region reduced their borrowing activity significantly. #Cbonds #EmergingMarkets #SovereignDebt #FinancialAnalysis #GlobalFinance #FixedIncome #bonds

A great piece by Bloomberg capturing the work the LSF is doing. - Together with our partners, we have created a new Africa sovereign debt index to help the global push for liquidity. - The index is expected to help improve liquidity in the market by providing a standardized way for investors to evaluate the creditworthiness of African governments and by increasing transparency and disclosure around African sovereign debt. - The index will be based on a combination of credit metrics, including credit ratings, debt-to-GDP ratios, and interest rates, and will be updated quarterly. - African economies have historically struggled to access affordable financing and have been subject to high levels of debt. - This index will also help attract more foreign investment to Africa, which could help to drive economic growth on the continent. #africa #debt #LSF https://lnkd.in/gXvsyfeQ

Did you know? One of the key challenges in tackling Africa's debt crisis is the reliance on foreign currency-denominated debt, which exposes many low-income countries to exchange rate volatility?🤔📉 In our just-released report, we explore how Multilateral Development Banks (MDBs) can provide immediate solutions by offering local currency loans to sovereign governments. This approach could help ease the debt burden by reducing currency mismatch risks and offering more predictable debt servicing terms. Our report emphasizes critical insights: ✅ The dangers of accumulating foreign currency debt in low-income countries (LICs) ✅ The crucial role of the International Development Association (IDA) in taking the lead in offering local currency loans ✅ The urgent need for expanded local currency financing to secure long-term debt sustainability The report examines Ethiopia’s debt crisis, where currency depreciation highlights the urgency of innovative financing solutions. It calls on IDA and other MDBs to take a leading role in providing local currency loans to help low income countries stabilize their economies. Read our full report to understand how MDBs can shift their lending portfolios to support Africa’s development aspirations and promote financial stability in low-income countries. 👉 https://lnkd.in/e59ZFbx3 #AfriCatalyst #DebtCrisis #LocalCurrencyLoans #SovereignDebt #AfricaDevelopment #FinancialInclusion #DebtRestructuring #EconomicStability #IDA Daouda Sembene, PhD Tetsekela Anyiam Osigwe Jean-Claude Tchatchouang Awa Mbaye Yacine N. Rachel Doornbosch Cyril Edouard ANDZE TSOUNGUI Center for Global Development African Export-Import Bank (Afreximbank) African Development Bank Group Development Reimagined African Center for Economic Transformation (ACET)

DECUMULATION IDEAS #78. So many villains in the debt crises in the emerging markets. A post by my friend Marianna Kozintseva and this Reuters article by Libby George #TomBergin, #TomWilson and #LawrenceDelevingne on outsize foreign currency debt and the role of #creditrating agencies miss a few simple points IMHO. 1. If anyone believes that credit rating agencies have a clue or care to do the right thing seem to have forgotten 2008!! They will sell their soul for a penny… 2. The countries needed the rating so they could get their debt bought by #emergingdebt managers selling products to #pensionfunds hungry for yield 3. My former employer, The World Bank, wrecked many of these countries with the infamous “Multi-Currency Loans” and then only lending in hard currency to countries with limited foreign currency income!! Research that loan product and why the MDBs deserve a good share of the blame. The nominal benefits of low interest rates was completely and irreparably wiped out by the currency effects on the principal. But then you never had Treasurers/loan product designers who were true bankers/finance people. When I was there, a single currency loan product was considered an innovation!!! And not even in local currency… 4. My International Economics professor and advisor to Ilan Goldfajn, the late/brilliant #RudiDormbusch, who advised many LatAm countries at the height of the debt crisis had a funny, but smart comment and I paraphrase liberally: Default on all your previous debt, because the best country to lend to was the one who had just cleared the decks. 5. These countries can take a page from #G20 President #Brazil who is issuing local currency debt that is long-term to satisfy key long term goals! No such nonsense of dealing with fickle foreign investors or useless rating agencies. See article with Alexandre Vitorino - https://lnkd.in/gnWBR87e. Thankfully, The World Bank Inter-American Development Bank and International Monetary Fund are totally oblivious to this innovation and had NO part in it. Have a good weekend https://lnkd.in/gXEKuYQa

𝗧𝗵𝗲 𝗡𝗲𝘄𝘀: This summer has been marked by three major sovereign restructurings happening simultaneously: 👉🏻 Zambia (completed), 👉🏻 Ukraine (finalized this week), 👉🏻 and now Ghana, which has officially launched its consent solicitation for the restructuring of its Eurobonds. The market is still eagerly awaiting developments from Sri Lanka and Ethiopia, expected to take place in the near future. It seems there’s no rest for EM Credit participants this summer. Emerging markets' high-yielding sovereigns have faced significant challenges in recent years, with the impact of COVID-19, the global interest rate shocks of 2021/22, and the Russian invasion of Ukraine. Each case presents unique complexities, but these types of transactions are crucial for the overall market health, as they aim to guide each sovereign back toward debt sustainability. One thing is clear: the world of EM Credit continues to offer promising opportunities for investors. It´s been a busy summer, right? Are you keeping an eye on the opportunities in EM Credit? #EmergingMarkets #SovereignDebt #DebtRestructuring #EMCredit

It was an absolute delight to share and debate my views during the review meetings that have resulted in this excellent report by United Nations Office of the Special Adviser on Africa on unpacking Africa's #debt which truly comes at a critical juncture when state #budgets across the continent are increasingly financed through debt, creating profound hardships and exacerbating #inequalities. The report's central recommendation for a development-oriented Global Financial Architecture (GFA) represents a necessary and responsible approach to protecting #Africa's #revenue base from erosion and abuse. This is particularly significant as countries grapple with the challenge of financing essential public services while managing unsustainable debt burdens. My views are that the discriminatory nature of current global financial practices, particularly regarding #currency risks, represents a form of #economic #hegemony that systematically undermines African development. The prevailing system, where external debt is predominantly denominated in foreign currencies, creates a cycle of dependence and vulnerability. When African currencies depreciate against major international currencies, particularly the US dollar, the real burden of debt service increases substantially, diverting resources from critical development needs. This creates a self-reinforcing cycle where currency depreciation leads to increased debt burden, which in turn weakens economic fundamentals, leading to further currency depreciation. The report's findings that currency depreciation has been a major driver of recent increases in African debt are particularly telling. Between 2013 and 2020, African debt increased by over 50 percent due to currency depreciation alone. This statistic underscores how currency volatility can amplify debt burdens independent of actual borrowing decisions. The recommendation for local currency lending emerges as a crucial intervention to break this cycle. By allowing African nations to borrow in their own currencies, local currency lending would eliminate the direct link between currency depreciation and debt service costs, providing greater stability and predictability in fiscal planning - do you agree? This recommendation for local currency lending takes on added significance as we approach the African regional consultations for the Fourth International Conference on #Financing for #Development (FfD4). This practical solution also aligns perfectly with the principles outlined in the #AddisAbabaActionAgenda (AAAA), particularly its emphasis on strengthening domestic resource mobilisation and reducing vulnerability to external shocks. As African nations prepare their positions for FfD4, the implementation of local currency lending represents a concrete, actionable proposal that can help realise the AAAA's vision of sustainable and equitable development financing.

2024 Africa Eurobonds In 2024, several African nations successfully tapped into the Eurobond and dollar-denominated bond markets, signaling renewed investor confidence. Côte d’Ivoire, Benin, Kenya, and Cameroon issued Eurobonds, while South Africa and Nigeria issued dollar-denominated bonds. Remarkably, many of these issuances were significantly oversubscribed—some by as much as 4x. At a time when U.S. Treasuries were yielding ~4-5%, African sovereigns offered yields as high as 10.75%, primarily to refinance or repurchase existing debt. The strong demand highlights that investors are comfortable with the risk-adjusted returns of African sovereign debt, even in a competitive global market. Looking ahead, as global outlooks for 2025 favor a drop in yields, I see opportunities for African issuers to refine their strategies: Smaller Initial Target Sizes: Creating scarcity could further drive demand. Tightened Pricing: If bonds are 3x oversubscribed, issuers can confidently reduce yields closer to the lower end of the pricing guidance during the book-building process. These steps could help African nations reduce borrowing costs and optimize debt management strategies this year. #debt #africaeurobonds #debtmanagement