The Editorial Team |

South Africa’s Risk Premium Limits Room for Rate Cuts, SARB Says

JOHANNESBURG (Capital Markets in Africa) – The South African Reserve Bank’s ability to cut interest rates to boost the economy is limited by political and policy uncertainty and inflation that’s still not sufficiently anchored at the midpoint of its target range. Investors pay a premium for South African debt to compensate for the risk of holding it and this constrains monetary policy by raising the interest rate needed to stabilize inflation, the central bank said…

Platinum Is a Cash Cow for Miners, But Dividends Remain Elusive

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LAGOS (Capital Markets in Africa) – Platinum miners have finally hit pay dirt with soaring prices and a weak South African rand. But the mood in the industry has been scarred by years of deep losses. Even though analysts say companies like Impala Platinum Holdings Ltd. and Sibanye Gold Ltd. will reap their best profits in years, executives are cautious about restarting dividends. Labor disputes, currency volatility and the need to reduce debt levels are some of the reasons…

Investors Ditch South African Bonds as Moody’s Junk Threat Looms

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JOHANNESBURG (Capital Markets in Africa) – There’s still a month to go until Moody’s Investors Service reviews South Africa’s sovereign rating, but foreign investors aren’t taking chances. Overseas ownership of South African government debt fell to 37% of the total at the end of August, from as high as 43% in March 2018, according to National Treasury data. That’s the lowest level since February 2017, suggesting some investors aren’t waiting for Moody’s to downgrade the…

EU Nations Discuss Time Limit for Irish Backstop in Brexit Deal

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LONDON (Capital Markets in Africa) – This week had seen some hints that there might be a way to get a deal. Tory MPs who refused to vote for the agreement that May negotiated suggested they could be persuaded to back a deal to avoid losing Brexit altogether. The Democratic Unionist Party — a key ally from Northern Ireland — has been publicly supportive of Johnson and his negotiating efforts. Johnson said at an event…

Boris Johnson Issues Ultimatum as EU Balks at His Brexit Plan

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LONDON (Capital Markets in Africa) – Boris Johnson is poised to issue an ultimatum to the European Union on Wednesday: negotiate Brexit on his terms within the next nine days, or face a no-deal divorce. A key EU player has already rejected the prime minister’s plan. On Wednesday, Johnson will address his Conservative Party’s annual conference in Manchester, England, and his office said he would present a “fair and reasonable compromise” offer to the EU. He…

U.S. Economy Slowdown Spurs Concern It’s Nearing Stall Speed

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NEW YORK (Capital Markets in Africa) – The U.S. economy’s growth rate is losing speed, prompting questions over how slow it can go and still avoid crashing into a recession. Whereas expansion below 2% used to almost guarantee the economy would subsequently contract, some economists now reckon the U.S. can wobble around 1%-1.5% without falling over. The decline in the economy’s so-called stall speed is a relief after data released Tuesday signaled the weakest manufacturing…

Eskom’s Stand-Alone Credit Rating Cut Deeper Into Junk at Fitch

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JOHANNESBURG (Capital Markets in Africa) – Eskom Holdings SOC Ltd.’s stand-alone credit profile was downgraded one notch at Fitch Ratings, signaling the South African power utility’s deteriorating ability to repay the debt without additional government support. Weakening revenue growth, profit-margin compression because of lower tariff increases, and higher primary energy costs were cited by Fitch as among the reasons for the reduction. Eskom’s poor liquidity and high debt levels are the worst among its peers,…

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