The third session covered the debt pipeline with panellists Samuel Amaoh, director of the debt management division at Ghana’s Ministry of Finance; Abraham Nwanko, DG of Nigeria’s Debt Management Office; and Matt Robinson of Moody’s Investors Services.
Ghana has had two successful Eurobond launches, in 2007 with $750m raised and in 2013 when the capital raised was about $1bn. Dr Amoah made the pertinent observation that if you want to enter the market, timing is essential. He described how Ghana came to the market two weeks after Nigeria’s bond launch that carried a coupon of 5% and was obliged to offer an 8% coupon.
He also commented that bonds are now being offered to the domestic capital market, helping to develop a local market.
Dr Nwankwo ran through the history of Nigeria’s bond issuance. “The most important objective for Nigeria going into the Eurobond market is to give us access to the private sector. As you know we have an infrastructure gap amounting to a $1bn a year – and much will have to be funded by the private sector.”
The all-important perspective of the rating agencies was outlined by Moody’s Matt Robinson. “It is really important to attempt to understand what a credit rating is,” Robinson said. “It is our objective to assesses a sovereign’s capacity and willingness to repay its debt.” He insisted rating agencies should not be seen as an alternative to due diligence processes.
Investor perspectives were tackled by the next panel, comprising Antoon de Klerk, an emerging markets investment expert at Investec Asset Management, and Vicente Pons, the managing principal at Frontera Capital – two active investors in Africa’s fixed interest markets.
For De Klerk, Africa’s markets are less determined by the policies of the US Federal Reserve than other global regions. “I think the one area where Africa could improve its performance is on the settlement side,” he said. “Let’s adopt global best practice.”
For Pons, the business model is a bit different: “From the investor side, there is a niche in the market where there is room for intermediaries like us to redistribute risk in smaller countries.”
The risk and rating session had a frisson because it pitched Richard Fox of Fitch Ratings together with Stephen Opata, head of risk management at the Bank of Ghana.
The previous day, Fitch had downgraded Ghana’s rating, but the two of them got on amicably enough. One interesting point was what part the region plays in colouring an evaluation of a nation’s risk profile.
The penultimate discussion focused on Nigeria’s Debt Capital Markets, which have demonstrated such impressive growth over the last few years. Uche Orji, MD/CEO of Nigeria’s Sovereign Investment Authority (NSIA), was an impressive speaker alongside fellow luminaries Mary Eduk of Nigeria’s SEC; Exotix Partners’ Ike Nwobodo; and Dotun Adegbite, VP of Argentil Capital.
IC Events, organisers of the summit, took the interesting decision to invite the CEO of the Dar es Salaam SE, Moremi Marwa, to provide an East African viewpoint.
The day closed with a debate on the use debt capital can be put to in Africa. Jill Dauchy, a managing partner of Newstate Partners, one of the summit’s principal sponsors, told of her experience in funding investments in infrastructure, and we had a view from South Africa with Muzi Kubeka, a director of Norton Rose Fulbright. Laughlan Waterston of SMBC made a significant point – that investors really need a pipeline of projects to create the traction and momentum to take the Africa story forward.
“I think this is a very interesting moment for Africa,” Dauchy said. “If African governments learn and understand what projects are appropriate for PPPs, you can get the investors, boosting the economy and getting the engine going to raise finance for projects they dream of.”