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Buy Out African Bondholders With IMF Resources, AfDB Chief Says

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International Monetary Fund resources should be used to buy out holders of African bonds and avert a crisis as a global push for debt relief runs aground, the head of the continent’s biggest multilateral lender said.

Akinwumi Adesina, president of the African Development Bank, said the Common Framework — created by the Group of 20 leading economies to get private sector creditors involved in debt workouts alongside public lenders — is unlikely to be used again in its current state as countries fear ratings downgrades if they apply.

Yet many African nations are in desperate need of debt relief as they’ll struggle to meet huge repayments to investors in the coming years, Adesina said. To get the private sector on board, he proposed buying back foreign bonds with some of the $650 billion of reserve assets known as Special Drawing Rights that the IMF is planning to issue this year.

“Those bullet payments when they become due — and I don’t think Africa will be in a position to pay them — will really cause a major, major debt crisis down the line,” Adesina said in an interview with Bloomberg News in Paris. “We need to use some of the SDRs as a way of buying down some of that debt, but also conditionally asking the private sector to join the G-20 Common Framework.”

Read more: Paris Club Seizes Pandemic Opportunity to Reclaim Lost Influence

Adesina’s proposal comes as leaders gather in Paris for a conference hosted by France on the financing of African economies. The efforts of international lenders have so far focused on suspending debt-servicing costs, but that does little to address the size of the $700 billion debt pile or involve the private sector, which holds more than half of that debt.

The framework is available to 73 poor countries, but only Chad, Ethiopia and Zambia have so far requested it. In February, Fitch Ratings downgraded Ethiopia, saying its decision to request G-20 help raised the risk of default, while Moody’s has placed the country on review.

There are also doubts over whether the IMF’s SDR allocation alone can restore the finances of African nations, with Fitch saying in March it would not be enough to solve imbalances.

“The debt of Africa right now is too much, it’s like running up a hill with a backpack of sand,” Adesina said. “This issue is not going to go away unless we find a mechanism to buy down some of that private-sector debt.”

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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Fidelity Bank to Raise U.S$500 Million for General Corporate Purposes

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Fidelity Bank, Nigeria’s leading tier-II bank, is planning to raise US$500,000,000 from the international debt capital market through an unsecured note issuance, the bank disclosed in a statement filed with the Nigerian Exchange Limited on Monday.

According to the bank, the proceeds will be used for general corporate purposes and to support its trade finance business.

The proposed aggregate offer size is US$500 million, due 2026, which will when issued ranked parri passu, without preference among themselves, with all other unsecured and unsubordinated obligations of the Bank. The lender intends to list the Notes on the Irish Stock Exchange, with the expectation that the notes will be traded on its regulated market. The Securities and Exchange Commission has confirmed that it has no objection to the transaction.

“In view of the foregoing, the Bank is pleased to notify the Nigerian Exchange Limited of planned investors meetings with respect to the Transaction scheduled to commence today October 18, 2021.

“The final decision to issue the Notes will however be subject to finalising the necessary transaction documentation and prevailing market conditions,” the bank stated.

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$4 Billion Eurobond to Deepen External Reserves, Build Confidence in Medium-term – Ecobank CEO

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The Cheif Executive Officer and Managing Director of Ecobnak Nigeria, Patrick Akinwuntan, has said the recent $4 billion Eurobond issued by the Federal Government of Nigeria will deepen external reserves and allows more confidence in the medium-term planning in the private sector.

Akinwuntan, who was assessing the global market as Nigeria announced its multibillion dollar Eurobond offering, during an interview on Arise TV in Lagos, said such loans would give a fresh breath to the economy because when the country takes on Euro bond that portion is reduced from its financing or public sector debt.

He advised those approaching the international debt market to have clarity of purpose and state their strengths and weaknesses.

Akinwuntan said the economy is showing strong trends owing to investments in infrastructure such as road and rail transportation, which is giving a lot of positive impact to the economy, adding that the private sector is also making improvements in power sector, telecoms, and information technology.

He said: “In the last two quarters, we have seen the global market rebounding from the very deep end of the COVID-19 that plagued 2020. We have seen, since the arrival of vaccines, the gradual opening of the global economy such that there is much more optimism in the market because we have learnt that shutting down the economy is not the best way to handle an epidemic and we have seen support from sovereigns, ensuring that there is steady growth within the various economies; supply chain has opened and we have seen in sub-Sahara Africa renewed interest in the Eurobond market in the international debt market. We have seen Benin republic, Ghana, Cote d’ivoire and Kenya all are approaching the market with significant success.

“Over subscription in each of them ranges from 200 per cent to 300 per cent and an all-high in Kenya close to 600 per cent or six times over subscription. This is a positive period for major economies like Nigeria, which is the lead economy in Africa, to take advantage and invite the global community to hear our story, invest in us and get good returns.”

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MTN Nigeria to Raise N89.9 Billion Via Bond Issuance

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MTN Nigeria Communications Plc (MTN Nigeria) has announced plancs to raise another N89.999 billion through bond issuance under its N200 billion registered shelf programme.

The telecommunications giant stated in a note to the Nigerian Exchange Limited and investing public.

MTN Nigeria said “an application has been submitted to the Securities and Exchange Commission (SEC) for the clearance of transaction documents for MTN Nigeria’s proposed bond issuance valued at N89,999,000,000; Series 2 of the N200,000,000,000 registered shelf programme.”

The telecom company had successfully raised N110,001,000,000 through Series 1 bond in the month of May 2021.

However, it said the final decision on the launch of the Series 2 bond will be taken once all regulatory approvals are obtained, and the investing public will be duly notified.

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