The Editorial Team |

With Virus Crisis Receding, Poor-Nation Debt Relief Stalls

LAGOS (Capital Markets in Africa) — A debt-relief initiative for poor nations is losing momentum as credit premiums narrow and lenders balk at the complexities of a concerted halt in payments. Private creditors won’t rush to join a G-20 led the effort to ease debt burdens, while borrowers may also be wary of joining the plan as their economies heal after the coronavirus-led selloff, potentially improving market access for issuers. Defaults may still pick up…

Kenyan Banks Seen Sheltering in Bonds as Virus Slows Lending

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NAIROBI (Capital Markets in Africa) — Kenya’s banks are likely to issue fewer loans this year and boost investments in government debt to safeguard earnings under threat from the fallout of the coronavirus. That’s the assessment of some analysts after the East African nation’s lenders released first-quarter results that showed lower profit, a surge in loan-loss provisions and a wave of debt restructurings. An economic slowdown is reducing demand for credit, leaving banks with little…

In Nigeria, Naira Wealth Doesn’t Always Mean Getting Dollars

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LAGOS (Capital Markets in Africa) — In Africa’s biggest economy, the hunt for dollars could threaten the survival of many manufacturers, even when they have a lot of nairas. The Central Bank of Nigeria has been rationing foreign exchange in efforts to protect the local currency amid the crash in oil prices and coronavirus outbreak. It only resumed weekly dollar sales of $100 million for small businesses and expenses such as tuition late in April. That means…

Rating Downgrade Fears Muddle Relief Plan: Africa Debt Watch

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LAGOS (Capital Markets in Africa) — Efforts to reduce the debt burden of African nations continued this week with private creditors offering a blueprint for contributing and the Paris Club of official lenders signing off on a payment halt for a sixth country. Private investors said they may offer low-income countries cash to offset debt payments due this year, a mechanism that could avoid triggering default. The plan was put forward by the Institute of International Finance,…

Trapped Foreign Investors Crash Nigeria Yields to 4-Year Low

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LAGOS (Capital Markets in Africa) — Foreign investors in Nigeria trapped by the lack of dollar liquidity are reinvesting in short-term debt, driving down yields to new lows. Discount rates on the high-yielding instruments dropped to the lowest levels since April 2016 as investors with nowhere to go piled into them. The stop rate for one-year paper, also known as Open Market Operation bills, fell to 9.9% at a central bank auction on Thursday, the…

U.K. Companies Can’t Afford to Top Up Furloughed Workers’ Pay

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LONDON (Capital Markets in Africa) — A quarter of firms using the U.K. government’s furloughing plan can’t afford to take on any of the cost of paying their workers, the Institute of Directors think tank says. Chancellor of the Exchequer Rishi Sunak has promised to announce details of how he plans to taper the program — which is currently paying 80% of the wages for 8.4 million jobs — this week. The changes are set to allow…

Keep Cummings and Carry On: How Johnson’s Bet Could Backfire

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LONDON (Capital Markets in Africa) — An hour into his grilling on a video call with Parliament’s most senior interrogators, Prime Minister Boris Johnson broke into a fit of coughing. It was a brief reminder that he had been through worse times in recent weeks, surviving a severe bout of Covid-19 that had put him in intensive care. Yet the current row over claims that his closest aide flouted the government’s own lockdown orders may still…

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