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Refinitiv Releases Sub-Saharan Africa Investment Banking Review for Q1 2019

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Global Banking - Investors King
  • Refinitiv releases Sub-Saharan Africa Investment Banking Review for Q1 2019

Refinitiv, one of the world’s largest providers of financial markets data and infrastructure, today announced that Sub-Saharan African investment banking fees reached an estimated US$93.5 million during the first quarter of 2019, 24% less than the value recorded during the same period in 2018 and the lowest first quarter total in 5 years.

Citi earned the most investment banking fees in Sub-Saharan Africa during the first quarter of 2019, a total of US$16.5 million or a 17.6% share of the total fee pool. Citi also topped the Any Sub-Saharan African Involvement Announced M&A Financial Advisor League Table with a 71% share of the market.

Deals involving a Sub-Saharan African target increased 71% in value to US$6.0 billion, driven by Naspers’ US$5.1 billion spin-off of its pay-TV unit MultiChoice.

South Africa’s overseas acquisitions accounted for 57% of Sub-Saharan African outbound M&A activity, while acquisitions by companies headquartered in Mauritius accounted for 43%.

Standard Bank Group topped the Sub-Saharan African Equity Capital Markets league table during the first quarter of 2019 with a 49% share of the market.

JP Morgan took the top spot in the Sub-Saharan African bond ranking during the first quarter of 2019 with US$944.4 million of related proceeds, or a 16% market share.

Summary of the findings:

INVESTMENT BANKING FEES 

Sub-Saharan African investment banking fees reached an estimated US$93.5 million during the first quarter of 2019, 24% less than the value recorded during the same period in 2018 and the lowest first quarter total in 5 years.  Fees from completed M&A transactions totalled US$36.9 million, a 31% increase year-on-year.  Equity capital markets underwriting reached US$11.6 million, down 70% from the first quarter of 2018 to a 2-year low, while fees from debt capital markets underwriting fell 53% to a 3-year low of US$14.0 million. Syndicated lending fees increased 20% year-on-year to US$30.1 million.  Completed M&A fees accounted for 39% of the overall Sub-Saharan African investment banking fee pool during the first quarter of 2019. Equity and Debt capital markets generated 12% and 15%, respectively, while syndicated lending fees accounted for 33%. Citi earned the most investment banking fees in Sub-Saharan Africa during the first quarter of 2019, a total of US$16.5 million or a 17.6% share of the total fee pool.

MERGERS & ACQUISITIONS

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$8.8 billion during the first quarter of 2019, up 41% from the same period last year.  Deals involving a Sub-Saharan African target increased 71% in value to US$6.0 billion, driven by Naspers’ US$5.1 billion spin off of its pay-TV unit MultiChoice.  Inbound M&A, involving an acquirer from outside of the region, was down 81% year-on-year to a 16-year low of US$540.1 million, while outbound M&A increased 24% to an 8-year high of US$2.2 billion. South Africa’s overseas acquisitions accounted for 57% of Sub-Saharan African outbound M&A activity, while acquisitions by companies headquartered in Mauritius accounted for 43%.  Citi topped the Any Sub-Saharan African Involvement Announced M&A Financial Advisor League Table during the first quarter of 2019 with a 71% share of the market.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance totalled US$1.1 billion during the first quarter of 2019, 61% less than the value recorded during the first three months of 2018.  Eight follow-on offerings totalled US$1.0 billion and accounted for 98% of total ECM activity in the region by value, while a single IPO accounted for the remaining 2%.  Icon Properties was the only initial public offering in the region during the first quarter of 2019, raising US$20.4 million on the Malawi Stock Exchange in January. Standard Bank Group topped the Sub-Saharan African ECM league table during the first quarter of 2019 with a 49% share of the market.

DEBT CAPITAL MARKETS

Sub-Saharan African debt issuance totalled US$5.9 billion during the first quarter of 2019, down 52% from the value recorded during the same period in 2018 and the lowest first quarter total since 2016.  Ghana and The Ivory Coast were the most active issuer nations with US$3.0 billion and US$1.2 billion in bond proceeds, respectively.  Ghana raised US$3.0 billion with its Eurobond issue in March, the largest bond offering in the region so far during 2019. JP Morgan took the top spot in the Sub-Saharan African bond ranking during the first quarter of 2019 with US$944.4 million of related proceeds, or a 16% market share.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Prices Drop on Stronger U.S Dollar

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The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.

The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.

The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.

Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.

The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.

The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.

A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.

Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.

This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.

 

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Crude Oil

Oil Rises as Threat of Immediate Iran Supply Recedes

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Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.

Brent crude was up by 82 cents, or 1.13%, to $73.68 per barrel, having risen 0.2% on Monday. U.S. oil gained 91 cents, or 1.3%, to $71.79 a barrel, having slipped 3 cents in the previous session.

Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.

A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.

It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week,” ING Economics said in a note.

Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia — a group known as OPEC+ — have been withholding output to support prices amid the pandemic.

“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.

To meet rising demand, U.S. drillers are also increasing output.

U.S. crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in its monthly outlook.

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Crude Oil

Oil Prices Rise as Demand Improves, Supplies Tighten

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Oil Prices - Investors King

Oil prices rose on Monday, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.

Brent was up 53 cents, or 0.7%, at $73.22 a barrel by 1050 GMT, its highest since May 2019.

U.S. West Texas Intermediate gained 44 cents, or 0.6%, to $71.35 a barrel, its highest since October 2018.

“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.

“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”

Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.

The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.

“If the inoculation of the global population accelerates further, that could mean an even faster return of the demand that is still missing to meet pre-Covid levels,” said Rystad Energy analyst Louise Dickson.

The International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.

IEA urged the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to increase output to meet the rising demand.

The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.

On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, Dickson said.

U.S. oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.

It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.

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