African Public Debt Management and Capital Markets Overview
The document presents insights on the latest developments and challenges in African debt capital markets, focusing on Southern and Central Africa's local currency debt activities. It discusses issuances, market characteristics, regulatory aspects, and the mechanics involved in bond market development within the region.
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Private and confidential 9th Forum on African Public Debt Management and Bond Markets Latest Developments and Challenges Facing the Debt Capital Markets in Africa Standard Bank Debt Primary Markets Contribution June 2015
Private and confidential Overview of The Southern and Central Africa Local Currency Debt Capital Markets Activity
Local Currency Issuances in Southern and Central Africa 3 Ghana Zambia 3 Issuances in 2014 . All Listed with the Lusaka Stock Exchange (LuSE) 1 issuance in 2014 (Microfinance Institution) Listed on the Ghana Alternate Exchange (GSX) 2015 known pipeline: 2 issuance Namibia Malawi 2 issuances in 2014 (Financial Institutions) All listed with the Namibia Stock Exchange 2015 known pipeline: 4 transactions 3 listed companies have issued over the last 3 years Botswana Mozambique 4 issuances in 2014 (2 FIs, 1 micro finance, 1 corporate) 2015 known pipeline: 1 (LCY), 1 (USD) 5 transactions completed in 2014 (3 FIs , 2 Corps) Currently known pipeline of transactions is 3 transactions
Comparative Market Development Dashboard **** 4 Market Characteristic Zambia Mozambique Botswana Namibia Ghana Malawi 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 Only private pension funds may invest in unlisted bonds Listed vs. Unlisted Not Required Type of Issuance Unsecured Unsecured Unsecured Unsecured Unsecured Secured Bank of Mozambique (BdM ) Mozambique Stock Exchange (BVM) Independent Legal Counsel Sponsoring Broker Transfer, Calculation, Payment, Receiving Agents Independent Arranger Bank of Zambia (BoZ) Lusaka Stock Exchange (LuSE) 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) Regulatory Authorities Independent Legal Counsel Sponsoring Broker Transfer, Calculation, Payment, Receiving Agents Independent Arranger Independent Legal Counsel Sponsoring Broker Transfer, Calculation, Payment, Receiving Agents Independent Arranger Independent Legal Counsel Sponsoring Broker Transfer, Calculation, Payment, Receiving Agents Independent Arranger Independent Legal Counsel Sponsoring Broker Transfer, Calculation, Payment, Receiving Agents Independent Arranger [Independent Legal Counsel Transfer, Calculation, Payment, Receiving Agents Independent Arranger] Utilized Parties to Bond Issuance Expected Time to Complete Issuance 10-12 weeks 10-12 weeks 8-10 weeks 8-10 weeks 12-14 weeks Shorter Timeframe 182 day Treasury Bill Longer dated Treasuries for longer dated paper Illiquid 182 day Treasury Bill Longer dated Treasuries for longer dated paper Highly illiquid NAD200 million area Existence of Bond Pricing Benchmark 182 day Treasury Bill Standard Lending Facility (SLF) 182 day Treasury 182 day Treasury Liquidity Highly illiquid Highly illiquid Highly illiquid GHS60 million area Highly illiquid Typical Issuance Size MZN300 to MZN500 million BWP300 million MWK2billion ZMW150 million
Private and confidential Developments and Challenges
Key Recent Developments for the SSA Debt Capital Markets 6 Development Rate Development Comments 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 Low Medium Legend:
Challenges with the SSA Debt Capital Markets 7 Challenge Comments Severity Besides Government Securities, Pension Fund and Asset Managers are challenged in finding options for investments Lack of Quality Options 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 Volatile markets conditions prevents certain issuers from coming to market Volatility Lack of Secondary Markets Investors can only Hold-to-Maturity High costs for corporate issuances Costs High Low Medium Legend:
