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
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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
Slide2Overview of The Southern and Central Africa Local Currency Debt Capital Markets Activity
Slide3Local 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
Slide4Comparative 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
Slide5Developments and Challenges
Slide6Key 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:
Slide7Challenges 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: