2020-04-04 IFR Magazine

of global cases, experts worry that Africa’s

creaking health systems could easily be

overwhelmed.

#O

CHAIREDûBYû3OUTHû!FRICANûlNANCEû

minister Tito Mboweni and Ken Ofori-Atta of

Ghana, the ministers met via video

conference on Tuesday. Many wore medical

masks, said UNECA, which hosted the

meeting.

“The call for debt relief ... should be for all

of Africa and should be undertaken in a

coordinated and collaborative way,” UNECA

said in a statement.

African governments have asked for

immediate relief from debt service

obligations, including at last month’s G20

summit, and would like to see a portion of

their debts forgiven or converted into long-

term, low-interest loans.

The complexity of Africa’s creditor

landscape, which includes traditional

bilateral and multilateral lenders, China,

commercial banks, commodity traders and

bondholders, will complicate efforts to ease

the continent’s debt burden.

Fitch and Moody’s warned that any

LINKINGûOFûOFlCIALûDEBTûRELIEFûTOûRESTRUCTURINGû

of private sector debt could qualify as a

distressed debt exchange, triggering a move

to restrictive default.

If relief is applied only to debt held by

OFlCIALûCREDITORSûITûWOULDûNOTûBEûCOUNTEDûASû

a default, Fitch said. It would offset rising

liquidity pressures on weaker frontier

market sovereigns, acting as positive for

their credit, Moody’s said in a note.

But Moody’s warned: “The lack of clarity

so far around potential private sector

participation suggests a heightened risk of

delay to debt service payments, which could

CONSTITUTEûDEFAULTSûUNDERûOURûDElNITIONvû

Goldman Sachs said in a note last week

that IDA countries, those with a GDP below

US$1,175 per capita in 2020, made up

around 10% of the JP Morgan Emerging

Market Bond Index. Zambia and Sri Lanka

WOULDûINûPARTICULARûSTANDûTOûBENElTûFROMû

the move, it said.

MIDDLE EAST

QATAR

SOVEREIGN HEARD NEARING ENTRY

Noises are growing louder that QATAR could

soon be in the market.

“I think they are coming for size,” said

one banker.

A second banker said that the sovereign

had envisaged raising US$5bn on the

international bond markets in 2020, before

a plunging oil price had sent those

requirements higher.

In March last year, Qatar issued three

tranches – including a US$6bn 30-year

Formosa bond – to raise a total of US$12bn

backed by nearly US$50bn of orders.

AMERICAS

ARGENTINA

REPUBLIC ADVANCES DEBT TALKS

AMID GROWING SCEPTICISM

As ARGENTINA presses ahead with its

restructuring after missing a completion

deadline last week, some are wondering if it

will ever cut a deal with bondholders who

are seen shouldering much of the burden of

the government’s debt sustainability plans.

The Ministry of the Economy laid out

more guidelines last week for the

restructuring of US$83bn in eligible foreign

currency local and international law debt,

calling for a substantial grace period, a

reduction in coupons, maturity extensions

and possible haircuts.

A March 31 deadline to complete the deal

had long been seen as unrealistic, more so as

the coronavirus pandemic impacts growth

throughout the world.

Even so, economy minister Martin

Guzman said that he will continue to talk to

creditors over the coming weeks before

presenting a proposal.

However, what has been presented so far

sits poorly with some in the market,

dampening hopes that a deal can be cut

soon unless the government shows a

willingness to concede to some creditor

proposals.

“Most of the adjustment on the

sustainability of debt is coming from

bondholders,” said Siobhan Morden, head of

,ATINû!MERICAûlXEDûINCOMEûSTRATEGYûATû

Amherst Pierpoint.

“Argentina is acting as if this process is

advancing and it is not.”

With the country shut out of

international capital markets, Argentina

will need a grace period “for years to come”

on its foreign currency debt to allow the

economy to recover and replenish central

bank reserves, the Ministry of Economy said

in a statement.

It also called for a substantial reduction in

coupons over the medium and long-term to

restore its ability to pay interest without

simply rolling over debt in the international

markets.

Maturity extensions and/or possible

reductions in the face value of bonds are

also being considered to achieve an

AMORTISATIONûPROlLEûANDûRElNANCINGûCOSTûTOû

permit the economy to handle adverse

shocks.

There has been a growing frustration

among bondholders who feel that the

government has failed to take in some of the

proposals that various creditor groups have

been submitting in recent weeks.

“Guzman at least is talking, but it doesn’t

feel like they are taking into account what

we say,” said one bondholder. “If they

CONTINUEûTHISûWAYûTHEYûMAYûNEEDûTOûFAILûlRSTû

and then come back to the negotiating

table.”

Some investors are making the argument

that the government should take into

account how income from seigniorage - the

difference between the cost of producing

money and its face value - could be used to

PAYûOFFûDEBTûINûWHATûREMAINSûAûHIGHûINmATIONû

economy.

They say that while seigniorage should

be ultimately eliminated, it should be

included in debt analysis as it will result in

International Financing Review April 4 2020 71

EMERGING MARKETS AMERICAS

ALL INTL EMERGING MARKETS BONDS

BOOKRUNNERS: 1/1/2020–31/3/2020

Middle East

Managing No of Total Share

bank or group issues US$(m) (%)

Excluding equity-related debt.

Source: Refinitiv SDC code: L5

1 Standard Chartered 11 5,348.27 24.7

2 Citigroup 9 3,407.71 15.7

3 Morgan Stanley 3 2,433.06 11.2

4 HSBC 7 1,120.65 5.2

5 BofA Securities 1 982.04 4.5

6 Goldman Sachs 1 982.04 4.5

7 Credit Agricole 6 743.36 3.4

8 SG 5 598.66 2.8

9 First Abu Dhabi 4 579.21 2.7

10 JP Morgan 7 532.25 2.5

Total 39 21,653.23

INTERNATIONAL ISLAMIC FINANCE DEBT

BOOKRUNNERS: 1/1/2020–31/3/2020

Managing No of Total Share

bank or group issues US$(m) (%)

Excluding equity-related debt.

Source: Refinitiv SDC code: J27

1 Standard Chartered 8 1,544.12 22.2

2 HSBC 5 775.86 11.2

3 Natixis 2 618.86 8.9

4 First Abu Dhabi 3 438.82 6.3

5 Islamic Development 3 424.54 6.1

6 Citigroup 3 412.44 5.9

7 Dubai Islamic 3 385.34 5.5

8 Riyadh Bank 1 300.00 4.3

9 JP Morgan 1 300.00 4.3

10 Landesbanken 1 285.71 4.1

Total 10 6,949.54

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