Corporate Resources’ direct holding is only
worth Rs16bn, lower than the share-
pledged loan of Rs27bn, according to
Lucror Analytics.
Fitch noted the coronavirus crisis will
MAKEûITûMOREûDIFlCULTûFORûTHEûCONTROLLINGû
shareholders to reduce share pledges.
India imposed a nationwide lockdown on
March 25 for 21 days.
4HEûRATINGSûAGENCYûWILLûlNALISEûTHEû
ratings once Future Retail’s restructuring
transaction, involving a purchase of in-
store infrastructure assets from Future
Enterprises, is completed.
The company’s 2025s, issued in January,
were bid at a cash price of 48.5 on April 3,
having dropped 50 points since the start of
the month.
Future Retail’s US dollar debut received
decent orders of more than US$3bn at the
time of issuance. US investors took 42% of
the deal as the Indian retailer leveraged its
new partnership with Amazon.IDBI WITHDRAWS TIER 2 OFFERINGIDBI BANK withdrew a planned onshore
offering of Basel III-compliant Tier 2 bonds
on March 27, after the Reserve Bank of
India announced a slew of easing
measures.
The base size was Rs5bn (US$66m) and
there was an option to increase the deal by
a further Rs5bn.
The bank said that the decision to
withdraw was made after the central bank
on March 27 cut its policy repo rate by
75bp and banks’ cash reserve ratio by
100bp, among other measures to support
liquidity, causing a sudden drop in interest
rates. The 10-year government bond yield
fell by 9bp on the same day.EUROPE/AFRICA
KAZAKHSTAN
REPUBLIC LOOKS FOR
FOREIGN CAPITALKAZAKHSTAN plans to borrow US$3bn on
FOREIGNûCAPITALûMARKETSûTOûlNANCEûITSû
BUDGETûDElCITûTHISûYEAR ûDEPUTYûlNANCEû
minister Berik Sholpankulov said on
Thursday.
The oil-exporting Central Asian nation is
INCREASINGûITSûDElCITûTARGETûTOû4TRNû
(US$5.4bn), or 3.5% of GDP, due to the
plunge in energy prices, the coronavirus
outbreak, and additional stimulus
spending.SOUTH AFRICA
COUNTRY FACES UP TO FORCED SELLERSSOUTH AFRICA‘s local bonds are about to hit a
wave of forced selling after Moody’s took a
long-awaited decision to cut the country’s
rating into junk territory.
The downgrade will see South Africa
kicked out of the benchmark World
Government Bond Index of local currency
debt at the end of April.
Citigroup strategists have estimated that
with South African government bonds
accounting for a 0.44% weight in the FTSE
7'") ûTOTALûOUTmOWSûSHOULDûAMOUNTûTOû
around US$6.6bn.
“However, the event has been expected
and thus priced in for a long time and,
WITHûMARKETSûALSOûSELLINGûOFFûSIGNIlCANTLYû
THISûMONTH ûTHEûACTUALûOUTmOWûISûLIKELYûFARû
smaller than the original estimate,” said
Citi.
“With FTSE delaying its month-end
rebalancing until the April end-of-the-
month review, that will provide passive
WGBI-tracker funds a little bit more time
to remove the SAGB exposure off their
portfolios.”
On Friday, Moody’s cut South
Africa’s long-term foreign and local
currency ratings to Ba1 from Baa3 on
DETERIORATINGûlSCALûSTRENGTHûANDû
structurally very weak growth, which the
agency does not expect current policy to
address effectively.
“We have been underweight South
Africa for quite some time,” said Uday
Patnaik, head of emerging markets debt at
LGIM. “Frankly said, I think Moody’s was –
very – late in downgrading South Africa to
sub-IG.”
Moody’s has maintained a negative
outlook.
A second investor said he was not
keen on the credit: “Personally I don’t
like the story in South Africa given
the lack of momentum for change
in both political and structural
reforms.”
The rand plunged to all-time lows
following the downgrade, dropping by
around 1% against the US dollar to below
18.00, and falling further by Thursday to
18.27.
The rand 10-year benchmark were bid at
11.15% by Thursday.
The bonds were at 13.25% on March 24
before the central bank launched a
quantitative easing style bond-buying
programme the following day alongside
easier repo terms for commercial banks.
In hard currency, yields on the dollar
September 2049s had climbed around90bp from March 27 to April 2, according
to MarketAxess prices, to 8.47%.
An S&P review in May will be critical,
Citi strategists said, given concerns over
further downgrades.
South Africa’s long-term foreign
currency ratings with S&P/Fitch are BB/
BB+, and the local currency equivalents
BB+/BB+. Outlooks with both agencies are
negative.
h!ûCOUNTRYûlRMLYûESTABLISHEDûATûTHEûTOPû
of sub-IG on a stable outlook across all
agencies can become an investment
opportunity should it adhere to reforms
ANDûlSCALûDISCIPLINEûFORûLONGûENOUGHûTOû
improve its medium-term potential,” said
Citi.
“But a country two, or three, notches
INTOûSUB
)'ûREQUIRESûAûSIGNIlCANTûAMOUNTû
of (often) unpopular measures to get back
TOû)' ûWHICHûMOSTû;lXED=
TERMû
governments either struggle to stick to or
aren’t willing to endure.”
4HEû#ITIûTEAMûSAIDûlSCALûHINDRANCESûSUCHû
as the public sector wage bill negotiations
and Eskom urgently needed to be resolved.
“Unfortunately, there is no evidence to
suggest that either problem will correct
anytime soon,” wrote Citi.
Economists at the Institute of
International Finance say that
multilateral support will be critical for
South Africa , with an IMF programme
offering the possibility to secure much-
needed funding and help to shore up
INVESTORûCONlDENCE
Finance Minister Tito Mboweni has said
the government would only approach the
IMF as a last resort and solely to fund
health interventions rather than stem
WIDENINGûlSCALûDElCITS
The sovereign held an investor
update call with international accounts
during the week, as part of its investor
relations work.International Financing Review April 4 2020 69EMERGING MARKETS EUROPE/AFRICAALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020–31/3/2020
Europe/Africa
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L21 JP Morgan 14 4,334.77 16.4
2 Citigroup 6 2,345.74 8.9
3 SG 5 2,000.13 7.6
4 BNP Paribas 6 1,937.51 7.3
5 Deutsche Bank 3 1,737.76 6.6
6 UniCredit 3 1,607.91 6.1
7 Morgan Stanley 2 1,345.85 5.1
8 Raiffeisen 3 1,250.17 4.7
9 Barclays 5 1,246.15 4.7
10 ICBC 4 1,160.74 4.4
Total 26 26,474.398 IFR Emerging 2327 p 67 - XX.indd 69 03 / 04 / 2020 19 : 21 : 02