South Africa

Corona Capital: Bailout fees, Distressed junk

25 Mar 2020

Concise views on the pandemic’s corporate and financial fallout: Wall Street brushes off its bailout pitchbooks. And high-yield debt suggests a deluge of defaults.

Virus gives Africa a good debt default excuse

23 Mar 2020

The continent faces Covid-19 largely on its own as other countries strain to help their own citizens. A young population helps; weak health systems and stretched public finance don’t. Cash-strapped countries like Zambia and Ghana may stop paying what they owe bondholders.

South Africa’s spending cuts border on hara-kiri

27 Feb 2020

The government wants to lop 6% annually off public sector wages to rein in the biggest deficit since the apartheid era. That’s heroic and points to a dangerous showdown with powerful unions. Even if it prevails, widespread protests will darken an already grim economic picture.

Animal spirits temper gold miners’ virus appeal

25 Feb 2020

An outbreak of the coronavirus in Italy boosted the price of bullion. While producers of the yellow metal stand to gain from higher prices, a global pandemic could hit some production. The bigger risk is CEOs squandering the windfall on unprofitable ventures or expensive M&A.

Naspers rejig only nibbles at Tencent discount

22 Jan 2020

The African tech group has sold $1.7 bln of shares in its Amsterdam spinoff Prosus, whose main asset is a $150 bln stake in the Chinese web giant. Using the funds to buy back stock has merit, but Naspers will have to be bolder if it wants to close the Dutch firm’s valuation gap.

Anglo’s tricky fertiliser bet has political hedge

8 Jan 2020

The miner is sinking $500 mln to buy Sirius’ troubled potash project in northern England. It will need to stump up an extra $3 bln to extract the mineral, whose price is murky. At least PM Boris Johnson, keen to revive poorer UK regions, should support Anglo American’s plan.

South Africa’s Absa opts for safety-first recovery

6 Jan 2020

The $9 bln group made former central bank deputy Daniel Mminele its new CEO. Like other local lenders, the former Barclays unit needs growth from elsewhere on the continent to offset domestic weakness. Installing a career regulator suggests little appetite for a high-risk charge.

South Africa heads for year of living dangerously

29 Nov 2019

Surging debt payments are squeezing public spending. President Cyril Ramaphosa will try to shrink bloated state firms like power utility Eskom, triggering ugly showdowns with unions that may hit the economy. Failure to face them down would douse reform hopes and hurt even more.

South Africa boozes in last chance debt saloon

12 Nov 2019

A ballooning deficit, dismal growth and unprofitable state firms are putting the Rainbow Nation’s debt on an unsustainable course. Low external borrowing makes a currency crisis unlikely. But a dependence on local bond markets can only delay the reckoning.

Naspers spinoff wades into UK food delivery fight

22 Oct 2019

Newly listed Prosus slapped down a 4.9 bln pound order for Just Eat, beating rival Takeaway.com’s all-share bid. Though the UK delivery group rejected the offer, its $120 bln suitor has deep pockets. Rivals like Uber Eats and Deliveroo have a new competitor to worry about.

Corporate South Africa feels expansion’s downside

5 Sep 2019

The nation’s banks, retailers and telcos have spread across the continent. With rioters in Johannesburg now attacking African migrants and their businesses, they’re facing boycotts in Nigeria and Zambia. That’s a problem for the likes of MTN that get lots of revenue from abroad.

Japan is laggard in China-led scramble for Africa

30 Aug 2019

Tokyo wants its companies to pour more money into the continent, partly to counter Beijing’s influence. The U.S. is beefing up overseas finance for similar reasons. But with China’s $43 bln of Africa investments set to overtake America’s, rivals have a lot of ground to make up.

Old Mutual row shows merit of the quiet CEO payoff

31 Jul 2019

The South African insurer’s shares lost 5% after sacked boss Peter Moyo convinced a court he should get his job back, at least temporarily. A public slanging match looks damaging for all concerned. There’s a reason why warring boards and bosses usually settle disputes quietly.

Naspers’ double discount

15 Jul 2019

The South African group is spinning off its stake in China’s Tencent into an Amsterdam-listed subsidiary. Will this narrow the persistent valuation gap between the two?

Naspers hopes two discounts are less than one

15 Jul 2019

The South African group is persistently worth less than its $135 bln stake in Chinese web giant Tencent. Listing assets in Amsterdam might shrink the gap, but the parent will still suffer a markdown. Investors should only click “accept” if the combined shortfall is much smaller.

Africa growth outlook puts democrats on back foot

3 Jul 2019

Ballooning populations mean per capita wealth is falling in key democracies Nigeria and South Africa. That’s a recipe for trouble. Alongside a stronger performance by autocratic Egypt, it also makes worrying reading for those who believe a democratic Africa is a more stable one.

Acacia and Barrick pay price for Newmont escapade

19 Jun 2019

Barrick CEO Mark Bristow won’t sweeten his offer to minority investors of the Tanzanian gold miner. A small raise could defuse the damaging stalemate. But after an expensive and failed tilt at Newmont, Bristow is under pressure to be seen to defend his shareholders’ interests.

South Africa’s central bank debate goes off-piste

5 Jun 2019

A shrinking economy is prodding the ruling ANC to talk of “quantity easing” and changing the respected central bank’s remit. The constitution protects monetary policymakers’ independence and inflation mandate. But the growing confidence of would-be money printers is worrying.

Airtel debt diet prepares it for Africa price war

28 May 2019

The Indian telecom giant is floating 25% of its African arm in London to help cut debt. The continent’s telecom market is growing quickly but competition is fierce. With less debt Airtel will be better positioned to fight back.

Barrick’s lowball Acacia offer is easy to refuse

22 May 2019

The Canadian bullion producer offered to buy out minority shareholders in the Tanzanian miner at an 8% discount. That gives an out from an $180 bln tax dispute with the East African country. It’s a bitter pill, but looming arbitration gives shareholders reason not to swallow it.