Cbonds’ Post

📈𝗘𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗗𝗲𝗯𝘁 𝗣𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁 𝗶𝗻 𝗝𝘂𝗹𝘆 𝟮𝟬𝟮𝟰 𝘊𝘣𝘰𝘯𝘥𝘴 𝘪𝘴 𝘦𝘹𝘤𝘪𝘵𝘦𝘥 𝘵𝘰 𝘴𝘩𝘢𝘳𝘦 𝘰𝘶𝘳 𝘭𝘢𝘵𝘦𝘴𝘵 𝘳𝘦𝘷𝘪𝘦𝘸 𝘰𝘧 𝘪𝘯𝘪𝘵𝘪𝘢𝘭 𝘱𝘶𝘣𝘭𝘪𝘤 𝘥𝘦𝘣𝘵 𝘰𝘧𝘧𝘦𝘳𝘪𝘯𝘨𝘴 𝘧𝘰𝘳 𝘑𝘶𝘭𝘺. In July 2024, emerging market governments issued bonds worth $177 billion, marking the lowest level since April 2024 and a 17% decline from June. 🌍China's exceptionally high borrowing in June had previously elevated issuance volumes but contributed to the overall decline in July. Excluding Beijing, issuance would have been slightly higher than in June. Despite a $40 billion reduction in Chinese sovereign placements—a step towards normalization—the volumes remain high, reflecting efforts to stimulate sluggish growth while keeping yield levels at bay. Other 𝗔𝘀𝗶𝗮𝗻 nations, including Malaysia, Thailand, the Philippines, and Vietnam, increased their market activity in June. Conversely, India and Indonesia slightly reduced their debt issuance. 🌍𝗟𝗮𝘁𝗶𝗻 𝗔𝗺𝗲𝗿𝗶𝗰𝗮 was the primary growth driver in July, with a 24% increase. Mexico significantly boosted its borrowings by over 60%, conducting extraordinary auctions for the first time in four months. Brazil also performed robustly, while Argentina continued to virtually abstain from bond placements. 🌍In 𝗔𝗳𝗿𝗶𝗰𝗮, overall volumes saw minimal change (-2%), as increased debt placements by South Africa and Morocco offset declines among other countries. Kenya, previously the fifth-largest regional borrower in June, significantly cut its borrowing plans due to ongoing protests and sovereign rating downgrades. 🌍The 𝗠𝗶𝗱𝗱𝗹𝗲 𝗘𝗮𝘀𝘁 experienced a significant reduction in borrowing (-31%), with Turkey and Saudi Arabia scaling back their issuance, and Qatar abstaining from bond placements altogether, allowing Jordan to take the second position in regional borrowings. #Cbonds #EmergingMarkets #SovereignDebt #FinancialAnalysis #GlobalFinance #FixedIncome #bonds

Moody's Investors Service in its latest report has stated negative outlook for Sub-Saharan African (SSA). The negative outlook for Sub-Saharan African (SSA) sovereign credit fundamentals reflects credit risks stemming from the sovereigns' large debt burdens compared with their revenue and the difficulty many will have refinancing at rates they can afford. ‘’Slowing global economic growth will weigh on exporters while also reducing the sovereigns' financial capacity to mitigate social risks. But there are country-specific positive developments such as ongoing structural reforms to strengthen institutions and governance’’. Said John Walsh, CFA, Analyst at Moody’s. Key points: Refinancing risk is high for upcoming debt maturities- SSA sovereigns have a large amount of foreign currency debt maturing in 2024 and beyond. Refinancing risk is high given tight financing conditions, foreign currency shortages and narrow funding sources Slowing global GDP growth, higher debt burdens increase vulnerability to social and environmental risks- We expect global GDP growth to slow in 2024, which will weigh on SSA credit quality. Slowing growth in China in particular will weigh on SSA commodity exporters Efforts to strengthen governance, institutions and business conditions – as well as other green shoots – create a few bright spots- SSA sovereigns implementing reforms to improve governance and institutional capacity may see improved creditworthiness, albeit from a low base What could change our outlook- SSA sovereigns regaining access to global capital markets and refinancing maturities at affordable rates would be consistent with a stable outlook.

📈𝗘𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗗𝗲𝗯𝘁 𝗣𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁 𝗶𝗻 𝗠𝗮𝗿𝗰𝗵 Cbonds is excited to share our latest review of initial public debt offerings for March. In March of this year, the local sovereign debt markets of EM countries witnessed notable developments. 🌏In 𝗔𝗳𝗿𝗶𝗰𝗮, stability prevailed with minimal fluctuations in government bond borrowing volumes. 🌏Meanwhile, the 𝗠𝗶𝗱𝗱𝗹𝗲 𝗘𝗮𝘀𝘁 saw a decrease in borrowing pace in major economies like Turkey and Saudi Arabia compared to the previous month. 🌏𝗟𝗮𝘁𝗶𝗻 𝗔𝗺𝗲𝗿𝗶𝗰𝗮 experienced a surge in domestic Argentine government bond placements as part of the country's sovereign debt restructuring. Brazil saw a slight increase in placements, while other countries in the region reported decreased borrowing activity. 🌏In 𝗔𝘀𝗶𝗮, India, typically ranked second behind China, did not place any government bonds with maturities over 1 year in March due to the end of the financial year and exhaustion of planned borrowing. On the other hand, China increased the volume of local government securities placements, while other countries in the region reduced their borrowing activity significantly. #Cbonds #EmergingMarkets #SovereignDebt #FinancialAnalysis #GlobalFinance #FixedIncome #bonds

Despite initial concerns about the ability of countries with low credit ratings to access bond markets, the first quarter of the year witnessed a record issuance of hard-currency bonds by emerging-market sovereigns. Notably, countries such as Côte d’Ivoire, Bahrain, Benin, and Kenya have successfully tapped into these markets, indicating a renewed avenue for liquidity. However, the high coupon rates accompanying these bonds raise apprehensions among private-sector bondholders, who fear a potential surge in sovereign debt restructurings. While absolute yields exceeding 10% may seem alarming, historical data and ongoing negotiations, such as Zambia's debt restructuring deal, provide some optimism regarding the resolution of sovereign defaults. Despite the complexity and idiosyncrasies inherent in such negotiations, the reopening of markets and additional support from institutions like the IMF signal a promising trajectory for lower-rated sovereign borrowers in emerging markets. This resurgence not only underscores the resilience of these markets but also invites further examination of the intricacies of sovereign-debt contracts and restructuring mechanisms. Source - https://lnkd.in/e_92SZNs #Finance #SovereignBonds #EmergingMarkets #DebtRestructuring

Nations in Sub-Saharan Africa have been locked out of international debt markets for 22 months now, and investors increasingly are betting the drought will soon end as countries seek funding for a slew of principal payments coming due this year and next. https://lnkd.in/dNucNCdU

𝐅𝐢𝐯𝐞 𝐍𝐞𝐰𝐬𝐰𝐨𝐫𝐭𝐡𝐲 𝐓𝐡𝐢𝐧𝐠𝐬 𝐢𝐧 𝐒𝐀 𝟐𝟒𝐭𝐡 𝐉𝐚𝐧𝐮𝐚𝐫𝐲 𝟐𝟎𝟐𝟒: 1.      The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) is set to meet again this Thursday, 25 January, and most experts believe this meeting will be uneventful as the committee will keep the repo rate unchanged. 2.      South Africa’s debt servicing costs are growing astronomically, with the country not being able to show much for the increases. In the Medium-Term Budget Speech in November last year, Finance Minister Enoch Godongwansa said that the nation’s gross debt is set to increase from R4.8 trillion in 2023/24 to R5.2 trillion in 2024/25. 3.      Minister of Electricity Kgosientsho Ramokgopa on Tuesday indicated that government will create a dedicated office for the procurement of private sector participation in expanding Eskom’s transmission network. 4.      Ramaphosa to no longer have sole authority in appointing SOEs’ boards. 5.      South Africa’s annual consumer price inflation (CPI) continued its downward trend by cooling slightly in December. More details on our website: https://lnkd.in/dpaSBM7G #cpi #debt #economy #eskom #inflation #interestrates #investment #investing #ipp #loadshedding #mpc #news #cyrilramaphosa #sarb #southafrica

#Increase in #Sovereign #DebtDefaults: Predictions from S&P Global Ratings, we may witness a rise in the number of sovereign debt defaults over the next decade, particularly among less affluent countries. These nations are grappling with significant debt burdens amid rising costs of servicing that debt and high borrowing rates. This year, countries like #Kenya and #Pakistan narrowly #avoided default with the help of the #International #MonetaryFund However, many of these nations face difficulties accessing bond markets to refinance their debts, as countries with similar sovereign ratings are forced to #pay over 10% on #government #bonds Recent examples, such as Ghana’s exit from default after restructuring dollar-denominated government bonds with a 37% debt write-off, and #Zambia completing a four-year debt restructuring process, highlight the complexity of the situation. #Ukraine also underwent a #restructuring of over $20 #billion in debt. S&P’s sovereign ratings specialist for the #EMEA region, Frank Gill, notes that countries finishing debt restructuring receive downgraded credit ratings, increasing the likelihood of subsequent defaults. Among the countries facing #significant government bond #repayments relative to their foreign reserves next year are the #Maldives and #Argentina Argentina, for instance, needs to pay approximately $11 billion in foreign currency-denominated government bonds. While the government claims it has the funds to meet these obligations, #President #JavierMilei issued a decree in September allowing for the #replacement of maturing bonds with new debt at market #rates without prior #parliamentary approval Such actions may not appear as defaults, but they could be viewed as a "distressed exchange" aimed at avoiding immediate default, as noted by S&P senior analyst Julia Filocca These #developments #underscore the challenges and #instability many countries face in an ever-changing economic landscape. How can we adapt to these changes and find new #investment opportunities in such conditions? Your thoughts and insights would be appreciated! P.S. U.S. companies with "junk" ratings need to refinance $2 trillion in debt between 2025 and 2029. This indicates #highdefault risks if U.S. #economic growth slows more than expected, according to Moody's Ratings #defaults #USA #economy

Africans wasting their time for a Credit Rating Agency that will yield nonsense. Africa doesn’t have developed capital markets, and creating a credit rating agency can’t just be some academic exercise. It has to be practical. A lot of Africans already say it won’t have any reputation. So how do we benchmark this agency against others when we’re dealing with outdated and inconsistent financial regulations across the continent? It can’t just be about criticising the other rating agencies or explaining things like we’re in school—anyone can do that. I know someone leading one of the most regulated capital markets in Africa, and they agree with me on this. Africa doesn’t even have a reliable source of data. Look at the 900 mining companies from China, Russia, and Zimbabwe operating in the DRC—most of them are invisible in formal assessments. That’s a systemic risk in the mining sector, and countries like Australia and Canada have much more advanced ways of assessing their industries, like using beta. How can Africa do the same when we don’t even have the basic infrastructure and transparency? Right now, trying to build a credit rating agency without addressing those issues feels like a waste of time and resources.

📊🚨 **Are Banks in Debt-Distressed Countries Playing with Fire?** 🚨📊 As seen in the latest report by the **World Bank**, banks in debt-distressed countries are increasingly exposed to government debt, while simultaneously being **less capitalized**. With sovereign debt skyrocketing and banks holding a larger share of government bonds, the risk to the **global financial system** has never been higher! 🧐 Take a look at this alarming trend: - 📈 Banks in **Emerging Markets and Developing Economies (EMDEs)** increased their exposure to government debt by **35%** from 2012 to 2023! - 🚩 In **debt-distressed** countries, this exposure soared by **50%** during the same period! - 🏦 Major countries with high exposure include **Egypt, Pakistan, and Suriname**, where public debt exposure is above **40%** of total banking sector assets. Is this sustainable? 🌍 With inflationary pressures and the post-pandemic recovery, is this growing **sovereign-bank nexus** a ticking time bomb? How long can banks in these countries survive without major reforms? This trend raises serious concerns for financial stability in the years to come, especially in countries marked as **distressed** on this graph. 💬 What do you think? Are we heading toward another financial crisis? 👉 For in-depth analysis and more insights, visit www.investbusiness.com! #SovereignDebt #FinancialCrisis #BankingSector #EMDE #DebtDistress #EmergingMarkets #GlobalFinance #Investing #Economy2023 #FinancialStability #InvestBusiness