The first bond is an inflation linked note, to the value of R800 million ($89.7 million) that was initiated as a result of a reverse enquiry from several investors.

The bond (ABLI05) has an annual coupon of the South African consumer inflation rate (CPI) plus 3.2% and will mature in February 2018.

The second bond, a six month unsecured floating rate note valued at R250 million ($22.3 million), was issued following the maturity of the ABLC07 note on 15 February 2013.

Set to mature in August 2013, the new floating rate note (ABLC08) has a coupon of 3 month JIBAR plus a margin of 40 bps per annum. The issue was substantially oversubscribed.

Gavin Jones, an executive of Funding and Liability Management, commented: “We are pleased that the South African debt funders continue to demonstrate their confidence and support for African Bank’s credit. Domestic funding margins have remained consistent to margins experienced toward the end of 2012.

On the foreign market, secondary market spreads have continued to tighten after an initial widening immediately after ABIL’s SENS announcement on the 7 February, concerning the NCR probe into African Bank. This bodes well for the Bank as it continues to grow its funding relationships in the global space.”

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The IFC Naija bond will be IFC’s first naira-denominated bond. It will also be the first placement by a nonresident issuer in the country’s domestic capital markets.

“Vibrant domestic capital markets are the foundation for lasting growth—and in Africa, they can mobilize capital to close the financing gap for key sectors such as infrastructure and housing,” said Jingdong Hua, IFC Vice President and Treasurer. “The IFC Naija bond will be a milestone achievement as we continue to work with governments and local authorities to strengthen domestic capital markets in the region.”

The IFC Naija bond is targeted at investors such as pension funds, insurers, asset managers, and banks who seek to diversify their portfolio while investing in high-quality assets. IFC bonds are rated triple-A by Moody’s Investors Service and Standard & Poor’s. Proceeds from the bond will be used to support IFC’s private sector development program.

Solomon Adegbie-Quaynor, IFC Country Manager for Nigeria, said: “The IFC Naija bond will support the government’s efforts to deepen domestic capital markets in Nigeria. It will help pave the way for other issuers in the domestic markets and makes available funds that can be put to work in the local economy.”

IFC’s committed portfolio in Nigeria stands at $1.1 billion, the largest country portfolio in Africa and the eighth-largest globally.

In May 2012, IFC launched its Pan-African Domestic Medium-Term Note Programme, which focuses on Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda, and Zambia. IFC has also obtained approvals to issue local-currency bonds in Kenya. Previously, IFC worked with Ghana, Zambia, and eight members of the West African Monetary Union to establish local-currency bond programs. In 2006 and 2009, IFC issued bonds denominated in CFA francs.

IFC issues bonds as part of its regular program of raising funds for private sector development, and to support the development of domestic capital markets. In many cases IFC is the first, or among the first, nonresident issuers. As of June 30, 2012, IFC had outstanding bond issuances totaling $45 billion in 11 currencies.

The IFC Naija bond is the result of a collaborative process among IFC, the Nigerian government and regulatory authorities, and market participants. Chapel Hill Advisory Partners Limited and Standard Chartered are lead managers of the transaction.

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These investment platforms will aid financial growth both for individual businesses and corporate bodies, a statement released by the company said.

The funds – FBN Money Market Fund, FBN Fixed Income Fund and FBN Heritage Fund – were recently admitted to the daily official list of the Nigerian Stock Exchange (NSE) after successful initial offerings.

The products provide investment-savvy individuals and institutions access to short-term liquid money market instruments, high-grade medium to long-term government bonds, and other debt instruments.

While the FBN Heritage fund give investors exposure to the money markets and bond markets as well as the equity and real estate markets; the FBN Fixed Income Fund offers investors opportunity to invest in Nigeria’s sovereign, state and corporate bonds and other gilt-edge long-tenor securities.

The FBN Money Market Fund on the other hand invests in very liquid short-term instruments. It leverages on its portfolio size, fund management expertise and group synergies to enhance returns to investors by investing in different risk instruments including treasury bills, bank tenured deposits, commercial papers (CPs) and bankers acceptances (BAs).

Director and Head, Asset Management, FBN Capital, Michael Oyebola said the funds were designed in a scalable way that allows small, medium and large scale investors to participate in the funds and benefit from the current high returns accruable from the market using the expertise of FBN Capital.

According to him, the primary objective of the funds was to achieve a high level of income obtainable from investments that is consistent with prudent investment management, the preservation of capital and maintenance of liquidity.

FBN Holdings PLC is the oldest and one of the largest banking groups in Nigeria.

The post FBN Capital Launches Mutual Funds To Boost Investment Opportunities appeared first on Ventures Africa | .

Meristem Research, a financial market consultancy firm showed in a recent study that the Kenyan stock market came second with a 39.32 percent YTD return on investment.

The Nigerian and Ghanaian bourses followed with a 35.45 percent appreciation, while the South African market returned a 23.81 percent profit to investors.

The rise of the Egyptian stock market which plummeted in capitalization by almost 50 percent in 2011 as a result of protracted economic and civil unrest, has been largely tied to prospective political progress in the country.

Local and foreign investors have plunged belief and funds in the market following a seemingly continuing calm at the end of the revolution that saw its former president Hosni Mubarak ousted.

However, the economic outlook of the country is uncertain. Massive unemployment persists, with fresh crisis erupting fuelled by religious disagreement over new constitutional make up.

The government has sort foreign aid from the World Bank, and several countries, with confidence that the funds will boost investor confidence in the economy and help drive growth.

According to BusinessDay, the US Dow Jones Average closed the year with YtD of 6.40 percent, NASDAQ Composite Index 13.95 percent, UK FTSE All Share Index 8.61 percent, France FAC 40 Index 14.80 percent and German Dax Index, 29 percent.

YtD from China’s Hang Seng was 23.90 percent, India BSE 30 index 25.82 percent and Japan Nikkei 225, 22.94 percent.

With comparison to the African contemporaries, the performance profile shows that African markets are the most attractive on returns, and is expected to drive increased migration of investors to emerging and frontier markets like Nigeria, other African countries.

Egyptian Exchange (EGX), comprises two exchanges, a Cairo and an Alexandria based bourses, with both governed by the same board of directors and sharing the same trading, clearing and settlement systems.

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With 448.6 billion naira ($2.8 billion) of debt in the Nigerian municipal and sub-national bond market, it is the largest such market of all African countries. South Africa’s sub-national bond market has outstanding debt of 14.1 billion Naira ($ 89.5 million) – a significantly smaller sum than the total debt of Nigerian sub-national debts.

The state of Lagos earlier this month announced a third round of bond issuance, inviting expressions of interest from investors for the sale of 80 billion naira ($507.9 million) of Lagos state bonds, for a seven year period.

Closing book-building on Monday, sector analysts expect that Lagos will easily raise the 80 billion naira ($507.9 million) that it hopes for. Senior bond analyst at stockbroking company Vevita Capital, Abiodun Oliyide, told BusinessDay: “It is likely that Lagos will get more than the N80 billion it is trying to raise…The Lagos bond issue was pretty much oversubscribed.”

This latest round of bond issuance was declared with a view to completing important infrastructure projects across the small state of Lagos – which despite its size, houses 22 million of Nigeria’s 162 million member population.

A business-hub in the West-African country, Lagos has seen a swelling in the number of its inhabitants as more and more people come to the state for business purposes. The infrastructure has as such become inadequate to meet the needs of the population, in particular, the transport system requires expansion.

Ambitious government plans for an urban-railway system across Lagos, and further infrastructure projects, have been halted over recent months due to a lack of funds, to be addressed with the present sale of bonds.

Only 13 of Nigeria’s 36 states currently have outstanding debt issued, and it is thought that positive yields on the present Lagos bond sale could prompt other states to turn to bond issuance to raise funds for infrastructure development.

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Speaking during the signing of the agreement in Abuja on Tuesday, the Director General of DMO, Dr Abraham Nwankwo said the process of selecting the national stockbroker was transparent and that the Securities and Exchange Commission, the Nigerian Stock Exchange (NSE) and the National Pension Commission amongst others, were part of the selection process.

Stanbic IBTC Brokers Ltd. will now be responsible for providing price for Federal Government bond on the floor of the stock exchange to enable retail investors to buy or sell.

It will also liaise between the DMO, NSE, other stockbrokers and participants to ensure that all activities concerning the bond and Federal Government securities listed in the future are effective in the market.

Nwankwo said that the involvement of the three organisations and others had made the process acceptable and would help to improve the bond market.

He urged the stockbroker to adopt the best practice and be guided by the fact that there might be shocks in the market.

The DG also explained that Stanbic IBTC’s appointment was aimed at ensuring that the bond market was properly listed and accepted at the stock exchange.

Commenting on the development, the CEO of Stanbic IBTC Bank, Mrs Sola David-Borha assured the public that the company would carry out the function meticulously. She also stated that the bank would enlighten the public on the issue of bonds and ensure best practices are upheld, pointing out that the capital market was deep and could accommodate shocks or turbulence.

In September, JP Morgan Chase- the world’s biggest underwriter of emerging market debt – announced in August that it would be adding Nigeria to its Government Bond – Emerging Markets index (GBI-EM) as of October, fueling investor interest in Nigerian bonds. The addition of Nigerian bonds to its GBI-EM index fueled investor-buying and predictions that the inclusion will attract up to $1.5 billion to the country.

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JP Morgan’s requirements for its GBI-EM qualification includes classification as a low/upper-middle income country by the World Bank for at least two consecutive years, availability of two-way daily pricing on bonds, sufficient liquid local bond market and among others.

International news agency, Reuters reports that JP Morgan having “around $170 billion of assets under management benchmarked against the index and given that Nigeria is expected to have a weight of 0.59 percent in the index by December 3, there could be over $1 billion flowing into its local bond market in the coming months, said Giulia Pellegrini, JP Morgan economist and strategist for Sub-Saharan Africa.”

She added that the eventual inclusion “raises the visibility of the Nigerian bond market on the international scene, placing what has been so far deemed a “frontier” market a step closer to more mainstream investment destinations.”

Commenting on the development, CitiBank sub-Saharan Africa strategist, Leon Myburgh said: “It has removed a barrier to easy entry and exit of foreign investors in the local bond market. This has spurred renewed interest by foreigners, helping raise market liquidity in and enhance the profile of the local bond market on an international level.”

Though more Nigerian bonds could be included in the GBI-EM in the future, three Nigerian bonds, maturing in 2014, 2019 and 2022, are qualified for the index, tentatively.

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The listing follows the issue of the first tranche of the bank’s 4 billion shilling ($47 million) bond, which was launched on 9th July 2012. The seven year fixed-rate bond is tradable in denominations of 100,000 shillings ($1,200) and will pay an annual coupon rate of 13.25 percent annually.

David Wachira, Consolidated Bank’s chief executive said the funds invested in the bank from the bond Issue will be channeled towards small and medium enterprises, with the purpose of financing longer term facilities to expand customers businesses.

“The funding will be directed to businesses in various sectors which include: Project financing; Real Estate; Hospitality industry; Education among others,” said Wachira.

The bank is trying to position itself as the top SME bank in the region.

Eunice Kagane Chairperson, Consolidated Bank, said the bank was pleased with the uptake of the corporate bond which closed at a performance of 84 percent.

“This is indeed a strong indication of support for our bank from our customers and the wider market,” said Kagane.

Eddy Njoroge, chairman of the NSE applauded Consolidated Bank’s contribution to the growing debt market.

“One of the six Vision 2030 priority sectors is the Financial Services and the bond market reforms are a major project whose aim is to deepen the capital market by creating access to the capital markets. This is why we, at NSE are so excited with the Consolidated Bank listing today because it is in line with our own strategy as a company but more importantly in line with our national economic blue-print, the Vision 2030.,” said Njoroge.

Njoroge said three other listed banks intend to raise 7 billion shillings ($83 million) of capital to support their balance sheets and grow their business in the near future.

Esther Koimet, the Investment Secretary in the Ministry of Finance presided over the bell ringing ceremony which was attended by the Bank’s board, sector regulatory bodies including NSE, Capital Market Authorities (CMA), Ministry of Finance and Central Bank officials.

The post Kenya’s Consolidated Bank To Trade $20m In Bonds appeared first on Ventures Africa | .

According to a Reuters report, the source said: “We are not going to the international market because we want to cover expenditure. We want to do it for investment.”

This development comes shortly after the IMF granted the north African nation a $6.2 billion credit over a 2-year duration. The Moroccan government plans to use the funds to shore up its economy in the possible advent of an economic emergency or collapse.

Morocco’s economy is highly dependent on the credit-hit Eurozone but it believes the secured IMF credit would encourage foreign investors and lenders to lend to it favourably.

Reuters’ source also revealed that Morocco “may introduce some terms that can allow institutional investors from the GCC (Gulf Cooperation Council) to subscribe for around half the total” of the $1 billion sovereign bond.

Last year, Morocco’s fiscal and current accounts deficits were at a record-high after many years because the government was forced to increase public sector wage and subsidies to curb the revolts that characterized the Arab spring from surging within its populace.

Its agricultural output was also plummeted due to harsh weather conditions, therefore contributing to the shortage of cash in its domestic market, which is the country’s strongest creditor.

Worst is, its foreign currency reserves can not fund five months of subsidies.

According to Reuters, authorities have “promised to start reducing spending on subsidies, costs of which amounted to roughly the budget deficit last year, but indicated the process may take until 2016.”

The post Morocco Plans To Sell $1bn Sovereign Bond appeared first on Ventures Africa | .

According to Nigeria’s finance minister, the announcement will be made in August, and members of the SWF management team have already been selected pending completion of due diligence.

“By September/October, we should be getting the team in place and we should be able to launch by the end of the year…We are in the last stage of due diligence,” she said.

It would be recalled that the government of Nigeria, in June, approved $1 billion from the state governors who initially protested the constitutionality of a SWF.

“We’re at a stage now where it’s accepted by the governors. The issue is how much goes into the fund, not whether the fund should exist,” Okonjo-Iweala told Reuters.

The SWF is the long-awaited replacement for the Excess Crude Account (ECA) in which Nigeria saves oil revenues over a benchmark price, currently $72 per barrel. The rationale behind the creation of the SWF is to save funds with which future generations would finance infrastructural development.

In addition, the fund would also be used to insulate the nation’s economy against commodity price shocks.

In related news, the honourable minister also disclosed the readiness of the Nigerian government to raise more than $600 million via a second Eurobond in 2013 which she said could involve investors in the diaspora.

“We will have a larger bond issue but we may decide that a portion of that should be directed to the diaspora, we have to watch what is happening with the global markets. We want to make sure that we float this at a time when it will be successful,” she said.

She also stated her intention to lower domestic borrowing in Africa’s second largest economy, an action necessitated by the high local interest rates coupled with fears of crowding out the private sector due to government’s excessive borrowing.

To prevent this, Nigeria’s apex bank, the Central Bank of Nigeria (CBN) held its benchmark rate at 12 percent earlier in July and urged Nigerian government to curb borrowing and invest in infrastructure and jobs – an aftermath of what it called “ominous signs for the domestic economy”

However, the finance minister said Nigeria’s overall borrowing is in good shape.

“We probably have one of the lowest debt-to-GDP ratios in the world today, at about 19 percent of GDP; external borrowing is 2.4 percent of GDP. I’m sure that’s probably the closest to zero you can find anywhere in the world,” she added.

While economists agree with the honourable minister on Nigeria’s healthy borrowing ratio, they expressed worries over the continent’s biggest oil producing nation not saving enough during years of record high oil prices, a position that was corroborated by the governor of the CBN who stated last week that in the event of a drop in oil prices, Nigeria does not have the savings to cushion the economy.

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