Sub-Saharan Africa debt issuance down a third so far this year

by Reuters 0

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Debt issuance in sub-Saharan Africa fell by nearly a third to 10.3 billion US dollars in the first nine months of the year, data from Thomson Reuters showed on Sunday, as sinking currencies and faltering economies forced borrowers to take a breather.

Taking advantage of historically low yields and strong investor appetite, Africans have borrowed heavily in international markets in recent years with debt sales reaching record highs in 2014.

But with the prospect of a hike in U.S. interest rates, slowing economies at home and a gloomy outlook for commodity prices, African states and companies have been more reluctant to tap capital markets this year.

South Africa, the continent’s most advanced economy, was the biggest issuing country, accounting for almost half of the activity, followed by the Ivory Coast with 25 percent, Thomson Reuters’ quarterly investment banking analysis showed.

The value of merger and acquisitions (M&A) targeting sub-Saharan African firms has risen 12 percent so far this year to 23.4 billion US dollars, the data also showed.

African companies are attracting increasing investor attention due to the spending power of the rising middle class and expansion of the continent’s natural resources sector.

Equity and equity-linked issuance dropped 16 percent from the same time a year ago, to 5.4 billion US dollars. But investment banking fees for sub-Saharan African investment banking services inched up 4 percent to 306 million US dollars.

Rand Merchant Bank, an investment banking unit of South Africa’s FirstRand, earned the most investment banking fees during the period with 38.7 million US dollars, or a 12.6 percent share of the total fee pool.