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9th  Forum on African Public Debt Management and Bond 9th  Forum on African Public Debt Management and Bond

9th Forum on African Public Debt Management and Bond - PowerPoint Presentation

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9th Forum on African Public Debt Management and Bond - PPT Presentation

Markets Latest Developments and Challenges Facing the Debt Capital Markets in Africa Standard Bank Debt Primary Markets Contribution June 2015 Overview of The Southern and Central Africa Local ID: 814436

markets issuances listed exchange issuances markets exchange listed stock market debt bank calculation payment receiving agentsindependent issuance legal counselsponsoring

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Slide1

9th Forum on African Public Debt Management and Bond MarketsLatest Developments and Challenges Facing the Debt Capital Markets in AfricaStandard Bank Debt Primary Markets Contribution

June 2015

Slide2

Overview of The Southern and Central Africa Local Currency Debt Capital Markets Activity

Slide3

Local Currency Issuances in Southern and Central Africa

1 issuance in 2014 (Microfinance Institution)

Listed on the Ghana Alternate Exchange (GSX)

2015 known pipeline: 2 issuance

Ghana

Zambia

3 Issuances in 2014 .

All Listed with the Lusaka Stock Exchange (

LuSE

)

2 issuances in 2014 (Financial Institutions)

All listed with the Namibia Stock Exchange

2015 known pipeline: 4 transactions

Namibia

5 transactions completed in 2014 (3 FIs , 2 Corps)

Currently known pipeline of transactions is 3 transactions

Mozambique

Botswana

4 issuances in 2014 (2 FIs, 1 micro finance, 1 corporate)

2015 known pipeline: 1 (LCY), 1 (USD)

3 listed companies have issued over the last 3 years

Malawi

Slide4

Comparative Market Development Dashboard ****

Market CharacteristicZambia

Mozambique

Botswana

Namibia

Ghana

Malawi

Listed vs. Unlisted

Only private pension funds may invest in unlisted bonds

Preference for listed bonds

Majority of bond issued in he market are listed

Required for all Commercial Paper issuances

BPOPF make up ~90% of investor market

Preference to invest in listed notes in the local market

Implementation of regulation 29 restricts investor from investing in unlisted bonds

Listing required for all issuances that intend to attract pension funds

Not Required

Type of Issuance

Unsecured

Unsecured

Unsecured

Unsecured

Unsecured

Secured

Regulatory Authorities

Bank of Zambia (

BoZ

)

Lusaka Stock Exchange (

LuSE)Bank of Mozambique (BdM )Mozambique Stock Exchange (BVM)Bank of Botswana (BoB)Botswana Stock Exchange (BSE)Bank of Namibia (BoN)Namibia Stock Exchange (NSX)Bank of Ghana (BoG)Ghana Stock Exchange (GSE),

Reserve Bank of Malawi (RBM)

Malawi Stock Exchange (MSE)Utilized Parties to Bond IssuanceIndependent Legal CounselSponsoring BrokerTransfer, Calculation, Payment, Receiving AgentsIndependent ArrangerIndependent Legal CounselSponsoring BrokerTransfer, Calculation, Payment, Receiving AgentsIndependent ArrangerIndependent Legal CounselSponsoring Broker

Transfer, Calculation, Payment, Receiving AgentsIndependent Arranger

Independent Legal CounselSponsoring BrokerTransfer, Calculation, Payment, Receiving AgentsIndependent ArrangerIndependent Legal CounselSponsoring BrokerTransfer, Calculation, Payment, Receiving AgentsIndependent Arranger[Independent Legal CounselTransfer, Calculation, Payment, Receiving AgentsIndependent Arranger]Expected Time to Complete Issuance

10-12 weeks10-12 weeks

8-10 weeks8-10 weeks12-14 weeksShorter TimeframeExistence of Bond Pricing Benchmark182 day Treasury BillStandard Lending Facility (SLF)182 day Treasury BillLonger dated Treasuries for longer dated paper182 day Treasury BillLonger dated Treasuries for longer dated paper

182 day Treasury182 day Treasury

LiquidityHighly illiquidHighly illiquidIlliquidHighly illiquidHighly illiquidHighly illiquidTypical Issuance SizeZMW150 millionMZN300 to MZN500 million

BWP300 million

NAD200 million areaGHS60 million areaMWK2billion

Slide5

Developments and Challenges

Slide6

Key Recent Developments

for the SSA Debt Capital Markets

Development

Comments

Development Rate

Issuances by the

DFIs, Other Organizations

DFI

issuances have set precedents in the market for other potential

issuers. There are other institutions active in the respective local markets

Regulatory Reform

Increased regulatory authority involvement in the debt capital markets

Regular Benchmark issuances

Most markets have regular auctions which have developed regular auctions to set benchmarks for corporate issuances

High

Medium

Low

Legend:

Slide7

Challenges with the SSA Debt Capital

Markets

Challenge

Comments

Severity

Lack of Quality Options

Besides Government Securities, Pension Fund and Asset Managers are challenged in finding options for investments

Understanding of the DCM Products

Improve understanding with issuer and investor

Lack of Realistic Expectations

General disconnect of issuance expectations between Issuers, Investors and Arrangers

Volatility

Volatile markets conditions prevents certain issuers from coming to market

Lack of Secondary Markets

Investors can only Hold-to-Maturity

Costs

High costs for corporate issuances

High

Medium

Low

Legend: