Kenya is extending a $600m syndicated loan due for repayment on Thursday by three months, following an eleventh-hour agreement after weeks of prevarication.

A Treasury official said negotiations with the three international banks underwriting the loan – Citigroup, Standard Bank and Standard Chartered – were concluded only on Tuesday, two days before the repayment date. Continue reading »

It’s official. Jaiprakash Associates, the Indian energy and infrastructure conglomerate, has sold off two hydroelectric plants in northern India.

The last time one of the group’s subsidiaries did something similar, its shares rallied on hopes that the move would bring down the group’s debts. But this time the stock has tanked because of signs the plants may have been sold too cheaply. Continue reading »

Investors in Ukrainian bonds have heaved a collective sigh of relief over the past few days – or, if not that, they have at least moved further away from the threat of default, if the recent retraction in bond yields and CDS spreads is any guide. But even in the darkest days of last week when Ukrainian yields soared to panic levels, investors could have taken one grain of comfort. Things, after all, could have been worse: they could have invested in Venezuela. Continue reading »

Ukrainian bonds are rallying strongly on Monday as investors digest the weekend’s dramatic events. Short term bonds issued by the sovereign and by Naftogas, the state gas company, have recovered from their recent panic levels.

But is there so much for investors to cheer about? Continue reading »

Finance Minister Uros Cufer

Slovenia is set to join a regional rush to the bond markets as it seeks to borrow €3.5bn, equivalent to around 10 per cent of its annual GDP, this year. The government announced that it would raise the cash largely through “long-term borrowing through issuing sovereign bonds”, with some short-term local notes also likely to be issued.

The statement raised the possibility of using the funds to help finance a €4.8bn bank bailout announced in December, which includes a €3.2bn recapitalisation programme. The government is confident that this can be met without resorting to an international bailout of the sort that has placed severe strictures on other eurozone countries such as Greece and Portugal. Continue reading »

Tapping bond markets is something of a trend for many African countries in the past year, including Gabon this month with a $1.5bn 10-year eurobond priced to yield 6.375 per cent.

But selling long-term debt is proving a hard game in east Africa, despite the presumable attractions of political stability and a favourable business environment. Interest costs for government securities are high, with long-term instruments maintaining yields of about 10 per cent or more, creating a growing concern for central banks. Continue reading »

Sitting comfortably?

No surprise about the way financial markets reacted to Tuesday’s Ukraine-Russia tie-up. With the chances of a default before the 2015 elections reduced effectively to zero, bond yields and the price of credit default swaps plummeted (see charts below).

Looks like bond holders can look forward to a long-running game of chicken. Continue reading »

Gabon joined the year’s rostrum of sovereign African eurobond issuers on Thursday with a 10 year “soft bullet” issue of $1.5bn priced to yield 6.375 per cent.

It follows comparable landmark issues over the past 15 months from Zambia, Rwanda, Nigeria and Ghana. So how does it stack up? Continue reading »

An interesting take on the 1997 Asia crisis from Carmen Reinhart, known for her influential (before it was corrected) paper on the relation between growth and debt, and Takeshi Tashiro.

A new research paper from the two economists this week argues that Asia still hasn’t recovered from 1997 in one key regard: investment is still pitifully low, from India to South Korea. Continue reading »

Call it the $164.5bn question. Turkey’s financing issues have sparked off concerns of late, as the extent of the economy’s dependence on continued ultra-loose US monetary policy appears to become ever clearer.

One well-known issue is the country’s current account deficit, which is still hefty despite lower growth than in recent years and which is overwhelmingly financed by relatively fickle portfolio flows. Another is a jawdropping number – the $164.5bn of foreign currency denominated debt coming due in the next 12 monthsContinue reading »

Sometimes you get lucky – the International Finance Corporation certainly did when it picked Thursday to launch its first local currency bond in Zambia.

As the US Federal Reserve confounded analysts by announcing that it will keep its quantitative easing programme steady at $85bn a month, prompting a rally in emerging market assets, the private sector arm of the World Bank issued a $150m ($28.5m) kwacha-denominated note at 15 per cent. The four-year “Zambezi” bond is the first issued by a foreign organisation in Zambia’s domestic market, and will raise money for IFC’s local operations, officials told beyondbrics. Continue reading »

What can Tata possibly see in this struggling sector?

For the second time this year, Tata Sons has announced plans to launch a new Indian airline. The illustrious group has joined forced with Singapore Airlines and put in an application with the Foreign Investment Promotion Board, India’s FDI regulatory body. Continue reading »

We have said it before and we will say it again: reports of the death of emerging markets have been greatly exaggerated.

Two major bond issues from Russia and South Africa this week, totalling $9bn, offer further proof that, despite the sharp sell-off in EM assets during the QE taper talk since May, there is still appetite from investors for EM debt – if the price is right. Continue reading »

What can Eskom do about it’s funding problems? The South African power utility is looking to spend a whopping $50bn revamping old plants and building new generators including Kusile and Medupi, set to be the world’s third- and fourth-largest coal-fired stations. But the company’s hopes of 16 per cent price increases over the next few years were dashed by the national regulator, which allowed it only 8 per cent.

So Eskom is looking at ‘equity-like debt’ instead. Will that work? Continue reading »

With its back pressed against the fiscal wall by an unexpectedly sharp economic slowdown, Poland’s government on Wednesday took an axe to part of the country’s pension system in a bid to bolster public finances.

Premier Donald Tusk said that part of the country’s obligatory pension system run by private funds would be dramatically revamped, with 120bn zlotys ($37bn) in government bonds held by the 14 funds being transferred to the government pension scheme and cancelled, which will reduce public debt by about 8 percentage points from its current 55 per cent of gross domestic product. Continue reading »