Emerging Market Debt issuance hits $340bn as investors hunt for attractive yields

by Editor

March 7, 2018 | 1:35 am
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Emerging market (EM) debt has hit $340 billion in 12 months to January as investors continue to hunt for yields around the world, according to data provider Dealogic.

Financial Times reported last week that structural reforms, reliable institution and political and regulatory stability are the factors underpinning investors’ appetite for frontier market debt.

For instance, the gross domestic product of Nigeria expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.

The introduction of the foreign exchange window by the Central Bank of Nigeria (CBN), a rebound in oil production and crude oil price ended a severe dollar shortage .

Nigeria’s capital inflow grew by 138.70 percent to $12.20 billion in 2017, from 2016 figures, according to the National Bureau of Statistics (NBS).

The country’s All Share Index  appreciated by 43 percent in 2017, one of the best performers in the world while the index has gained 11.15 percent this year.

Nigeria has raised $2.5 billion Eurobond to refinance some of its Treasury bill portfolio.

Kenya has raised $2 billion of long-dated bonds, including 30-year debt as the East Africa’s largest economy locked horns with the International Monetary Fund over standby credit facility.

The country is one of the best performers on the continent as lower oil price and copious investment in infrastructure helped support economic expansion.

South Africa could tap the international debt market as S and P Global Ratings and Flitch Ratings rated the country’s long term foreign currency debt.

However, Africa’s most advanced economy could tap the international debt market this year ahead of a possible rate hike by United States’ Federal Reserve (Feds).

Analysts say an economic stimulus and a receding unemployment could force the U.S Feds to hike rates three times this year. They add that when this happens, investors will lose appetite for emerging market (EM) debts.

EM borrowers raised over $150 billion in syndicated bond sales in January, according to Dealogic, 15 per cent higher than the previous annual record for the start of the year.

The cumulative Eurobond issuance by Egypt, Nigeria, South Africa, Ivory Coast, Kenya, and Senegal has hit $25.90 billion since 2017, according to data compiled by BusinessDay.

by Editor

March 7, 2018 | 1:35 am
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