After years in the cold, signs of renewed investor interest in Africa as
2024 proving bumper year (By Miranda Abraham)

   Rand Merchant Bank (RMB)
   After years in the cold, signs of renewed investor interest in
   Africa as 2024 proving bumper year (By Miranda Abraham)
   17-May-2024 / 14:30 CET/CEST
   The issuer is solely responsible for the content of this
   announcement.
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   By Miranda Abraham, Head of Loan Syndication at RMB
   (www.RMB.co.za) in London.

   Over the past few years, African debt markets have faced
   significant challenges due to a combination of factors including
   soft global economic conditions, the COVID-19 pandemic and
   related supply chain failures.

   These factors led to a decrease in demand for African debt and a
   dramatic rise in borrowing costs, placing sovereign borrowing in
   particular in a difficult position.

   In fact, in 2023, there was no issuance at all in Sub-Saharan
   Africa, marking the first time since 2008 that this happened.

The global bond market was effectively frozen for Africa.

   The funding squeeze and the closure of the bond market forced
   African countries to seek alternative sources of financing, such
   as domestic capital markets, multilateral institutions, and
   bilateral agreements.

But in January and February 2024, everything changed.

   Suddenly there was a rush of deals. First Cote d'Ivoire reopened
   the market with a bumper $2.6bn of bond issuance. Even more
   encouragingly, the sale was oversubscribed more than three times,
   with a combined demand of $8 billion.

   Then Benin came to market with a smaller issuance of $750m at a
   yield of just under 9%. Kenya issued a hefty $1.5bn at a yield of
   10.4%, the proceeds of which will be used to buy back most of its
   debt which falls due in June this year. First Quantum Minerals
   issued $1.6bn, closely following Kenya.

   Moreover, these bonds actually all priced lower than initial
   guidance - indicating that investor demand was far stronger than
   initially anticipated.  The issuance was proof positive that the
   market had turned a corner and confidence had returned.

   This confidence spread to the loan market, with banks suddenly
   rushing to pitch loan bridges to bond issuance and / or
   medium-term financing at more attractive loan pricing than
   borrowers have been offered over the last 2 years.

   As we approach the midway point of the year, the prospect of
   further interest rate cuts from central banks seems less and less
   likely. Debt capital markets issuance however is continuing with
   recent deals for Puma Energy for $500m and phosphate miner OCP
   S.A., which successfully completed a bond issue on the
   international markets for $2bn. There are more in the pipeline
   which suggest the African bond markets are alive and well again.

   These recent debt sales in Africa show that investors are buying
   riskier bonds. This trend is likely to continue as more
   high-yield borrowers return to sub-Saharan Africa, seeking to
   capitalise on the region's growth potential.

   The cost of borrowing remains high in Africa, but with
   projections that most of the central banks will be reducing their
   base rates in hard currency, borrowers will immediately start to
   see the benefits as costs fall.

   Encouraging too, is that the debt levels in sub-Saharan Africa
   have largely stabilised at around 60%, and this could begin to
   ease slightly from 2024, halting a nearly decade-long upward
   trend.

   We are also optimistic of a rise in event-driven financing this
   year.

   Event driven financing refers to strategies where investment
   decisions are made based on specific corporate events, such as
   mergers, acquisitions, spin-offs and bankruptcies.

   In the context of Africa's economic development, event-driven
   financing can play a crucial role. We expect event-driven
   financing in Africa to leverage innovative financing instruments
   to crowd-in private climate investments and support sustainable
   development and green initiatives.

   Importantly, the African Development Bank Group has actively
   promoted the use of philanthropic and other forms of capital to
   create an ecosystem of green growth.

   This approach has been highlighted at the World Economic Forum
   (WEF) earlier this year.

   Additionally, the African Union has hosted the Conference of
   Ministers of Finance, Planning, and Economic Development
   (COM2024) in Victoria Falls, Zimbabwe, with a theme focused on
   financing Africa's green and inclusive transition. The event
   brought together experts to discuss ways to mobilise climate
   finance at national, regional, and global levels.

   Events such as the African Economic Outlook 2023 launch and the
   Conference Internationale De Lome Sur Le Financement also focused
   on venture capital and infrastructure financing for African
   projects and businesses as the continent looks towards a new
   financial landscape to support green industrialisation and
   sustainable growth.

   African countries are seeking to address global development
   challenges and are calling for a fair financial system to handle
   climate shocks and implement their development agenda.

   Debt remains a headwind and inequalities in the international
   financing architecture make access to finance inadequate and
   expensive.

   In other developments, the African Union has emphasised the need
   for global reforms, concessional finance, Special Drawing Rights,
   and Africa's voice in decision-making to address debt, risk
   ratings, and the cost of capital.

   We are also seeing a significant uptick in activity around
   underwriting, not only for clients who want fund certainty for
   general loans, but for M&A activity as well, which clearly
   demonstrates renewed investor appetite.

   While M&A deals tend to have a long lead time before coming to
   market, they are eagerly anticipated and often represent new
   borrowers and new transactions, along with renewed investor
   activity in a challenging market.

   All the signs point to a positive turnaround for both bonds and
   loans in 2024.

   There is plenty of pent-up demand from both borrowers and
   investors, and as the year got off to a strong start there are
   clear grounds for cautious optimism.

Distributed by APO Group on behalf of Rand Merchant Bank.

   Download image: https://apo-opa.co/4bmaIJM (Miranda Abraham, Head
   of Loan Syndication at RMB in London), Head of Loan Syndication a

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   The issuer is solely responsible for the content of this
   announcement.
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1906089 17-May-2024