Debt capital markets in Africa remain resilient, displaying innovation in response to challenging regional and global environments, according to South Africa-based Standard Bank Group.
A review of the continent’s activity in debt capital markets reveals continued growth in issuance, including the evolution of new asset classes.
These positive trends speak well to both the resilience and future growth prospects of Africa’s debt capital markets, according to a statement made available to Business News yesterday.
Debt capital markets across Africa’s sub-regions have remained robust despite the macroeconomic and political challenges presented, “indicating their growing maturity and depth, along with their ability to develop solutions in the face of volatility and change,” said Zoya Sisulu, head of debt capital markets South Africa at Standard Bank.
In Kenya, for example, structural challenges, including two banks placed under statutory management in 2016, saw investors move out of corporate bonds to the perceived safety of government paper and tier one banks.
Similarly, in response to local growth concerns and increased political uncertainty in South Africa, issuance in the country’s debt capital markets was largely focused on high quality deals on well-known credit, given the increased risk aversion.
In West Africa, Nigeria’s debt capital markets were characterised by volatility driven by increased inflation, high interest rates and low liquidity arising from a drop in global oil prices and depreciation of the Naira.
Tanzania’s National Microfinance Bank Plc issued a $19 million three-year senior and unsecured fixed rate retail bond taking advantage of the substantial liquidity. n