SOUTH AFRICA
SOVEREIGN FACES WAGE BILL TUSSLE3OUTHû!FRICANûlNANCEûMINISTERû4ITOû
Mboweni plans to cut the country’s public
sector wage bill as the sovereign faces
ratings pressure, although analysts have
questioned whether the reforms can be
enacted.
Mboweni delivered the country’s budget
on Wednesday, with measures outlined to
CONTAINûAûRISINGûBUDGETûDElCIT
Fitch said that budget highlighted the
SEVEREûDETERIORATIONûINûPUBLICûlNANCESûANDû
the long-term challenge of stabilising
government debt.
“Fiscal metrics worsened moderately
compared with the Medium-Term Budget
Policy Statement (MTPBS) in October,
DESPITEûTHEûANNOUNCEMENTûOFûSIGNIlCANTû
expenditure cuts,” wrote Fitch.
“Moreover, these consolidation measures
rely heavily on hoped-for moderation in
public sector wages, which might not
materialise, adding further risks to South
!FRICASûDElCITûANDûDEBTûTRAJECTORIESv
South Africa’s biggest trade union
federation COSATU said it will not allow
workers’ wages to be slashed.
Mboweni said that SOUTH AFRICA was
DETERMINEDûTOûREINûINûTHEûDElCITûWITHINûTHEû
three-year budget framework. He proposed
no major tax increases and expressed hope
Moody’s would grant another reprieve at its
next review, due in March.
“I don’t think they will re-rate us. I am
positive they may give us a bit of a ‘klap’
which we will absorb. But I don’t think they
will do anything untoward,” Mboweni told a
news conference, using the Afrikaans word
for a slap.
The sovereign is rated Baa3/BB/BB+, and is
on a negative outlook with all three major
ratings agencies.ING said there are concerns over the
GOVERNMENTSûlNANCIALûSTABILITY
“There is no credible path towards
stabilising government debt/GDP
over the medium term,” wrote ING
analysts.
South Africa’s September 2029s dropped
almost two points from Monday’s open to
100.95, according to Tradeweb, and the
September 2049s fell nearly four points to
97.28.
The sovereign intends to raise US$8.5bn
through international bonds over the
medium term.MIDDLE EAST
LEBANON
BUYING TIME FOR RESTRUCTURING PLANLEBANON intends to ask for a seven-day grace
period for a US$1.2bn Eurobond that
matures on March 9, as it is entitled to, to
GIVEûlNANCIALûADVISERSûMOREûTIMEûTOûDRAFTûAû
restructuring plan, a government source
said on Thursday.
Lebanon will seek the seven-day grace
period ahead of the March 9 date, the source
said.
Financial sources said the exercising of
the seven-day grace period will make it
more likely the government will seek to
restructure the March 2020 Eurobond.
Lebanon faces two further Eurobond
maturities this year, one in April and one in
June.
The Lebanese government last week
appointed US investment bank Lazard and
LAWûlRMû#LEARYû'OTTLIEBû3TEENûû(AMILTONû
ASûITSûlNANCIALûANDûLEGALûADVISERSûONûTHEû
widely expected debt restructuring.S&P earlier in February lowered Lebanon’s
sovereign rating on a probable debt
restructuring. Moody’s also downgraded
,EBANON ûSAYINGûTHEûRATINGûREmECTEDû
expectations that private creditors will
likely incur substantial losses in any debt
restructuring.
&ITCHûALSOûSAIDû,EBANONSûlNANCINGû
position points to debt restructuring.
Lebanon’s long-brewing economic crisis
CAMEûTOûAûHEADûLASTûYEARûASûCAPITALûINmOWSû
slowed and protests erupted against the
ruling elite over corruption and bad
governance - root causes of the crisis.AMERICAS
ARGENTINA
RESTRUCTURING TALKS SEEN PASSING
MARCH DEADLINEThe March-end deadline set by the ARGENTINA
government to complete a multi-billion
dollar bond restructuring is looking
increasingly out of reach.
The complexity of talks among holders of
different types of bonds, the government’s
focus on long-term debt sustainability and
the lack of progress made has some thinking
a restructuring will not take place until
early summer.
While economy minister Martin Guzman
was in New York last week to talk to
creditors, the trip was seen by one
bondholder as a “photo op” rather than the
start of any in-depth discussions.
“At this point they are not ready yet to talk
to us. Argentina still has to get its programme
in better shape,” said the bondholder.
The administration of President Alberto
Fernandez last month set out a tight
schedule for debt restructuring with
sovereign bondholders.
4HATûINCLUDEDûMANDATINGûAûlNANCIALû
adviser - which Argentina has yet to do - in
the third or fourth week of February
followed by 10-days of meetings with
BONDHOLDERSûANDûTHEûLAUNCHûOFûAûlNALû
structure in the second week of March.
“They have already admitted that was a
political timetable. May or June is more
realistic,” said the bondholder.
Indeed, the government is seen having
more time than the self-imposed deadline as
it is thought to be ready to attend to its next
big bond payment on the 8.75% Bonar 2024
on May 7.
“We have heard they have put aside
money to pay the coupon but not principal
in line with their stated policy,” said Walter52 International Financing Review February 29 2020ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Europe/Africa
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L21 JP Morgan 11 3,894.76 17.0
2 Citigroup 5 2,195.74 9.6
3 SG 4 1,798.35 7.8
4 BNP Paribas 5 1,738.07 7.6
5 Deutsche Bank 3 1,737.76 7.6
6 UniCredit 3 1,607.91 7.0
7 Morgan Stanley 2 1,345.85 5.9
8 Raiffeisen Bank Intl 3 1,250.17 5.4
9 Indl & Comm Bk China 4 1,160.74 5.1
10 Gazprombank 3 793.65 3.5
Total 18 22,958.10ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Middle East
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L51 Standard Chartered 10 5,186.61 25.7
2 Citigroup 8 3,246.05 16.1
3 Morgan Stanley 2 1,833.06 9.1
4 HSBC 6 1,096.43 5.4
5 BofA 1 982.04 4.9
6 Goldman Sachs 1 982.04 4.9
7 Credit Agricole 6 743.36 3.7
8 First Abu Dhabi 4 579.21 2.9
9 Credit Suisse 1 461.02 2.3
10 Nomura 4 384.03 1.9
Total 30 20,145.028 IFR Emerging 2322 p 45 - 54 .indd 52 28 / 02 / 2020 18 : 17 : 16