The near-20% slump in the rupee is the most obvious symptom of the crisis of confidence buffeting the country, and also one that risks making things worse by eroding unhedged balance sheets and importing inflation.
What better way to mark the 2,000th edition of IFR than to look back at some of the standout deals completed since our first issue was published on March 22 1974? Though the sharp-eyed will realise that there are still some months to go until our 40th anniversary (don’t worry, we won’t do this again at that point), we can claim that we are in our 40th year, so we highlight 40 deals. (See below)
The unwavering commitment of politicians and central banks to tackle the world’s indebtedness head-on has welcomed in a period of relative calm for the SSA markets. While there are still concerns that the favoured austerity regimes are doing little to relieve economic stagnation in many countries, there are now sufficient backstops in place to convince investors that, at least, things aren’t going to get any worse.
Shelter from the storm: Turkey can be forgiven for feeling smug. With Cyprus cranking the eurozone crisis back into high gear and the EU’s peripheral members again looking fragile, at first sight the country stands out from its rowdy neighbours as a paragon of growth and financial stability.
Moving the goalposts – To paraphrase Woody Allen, if the IMF didn’t exist, perhaps it would be necessary to invent it. Few doubt that we need it, or something like it. This report looks at the IMF’s evolving role five years on from the financial crisis alongside that of the development finance bodies such as the World Bank Group and regional development banks, and considers whether these institutions are adapting to the world’s new financial architecture – or simply trying to adapt that architecture to suit their outlook.
Party time: Appearances can certainly be deceptive. While it felt for all the world that 2013 was frantically busy in the debt capital markets, Thomson Reuters data actually show that overall volumes for the first nine months fell 3% to US$4.2trn.
Project finance has, to some extent, returned to its roots in recent years with the technique being used to fund major capital expenditure projects in the emerging markets. The Middle East & Africa region is one such market - where project finance has been successfully used in the past and the prospects for using it in the future look bright.
March of the Frontier Markets - First the good news: African sovereigns have tapped the international debt market with aplomb in the past 12 months. Repeat issuers such as Nigeria and Ghana as well as debut borrowers like Zambia and Rwanda wowed with their well executed and heavily over-subscribed international bonds, enabling them to squeeze on price and leaving investors hungry for public bonds in the pipeline for the likes Kenya, Senegal, Angola and others.
Central banks have been a boon for the global capital markets, stepping in to provide extraordinary liquidity that has buoyed assets across the board. After years of treading water, equities have rallied. And bond issuance has turned into a bun fight, with investors scrambling over each other to pick up even the slimmest yields – a state of affairs that has suited cost-conscious issuers just fine indeed.
The past year has been characterised by spread-tightening across the credit spectrum. This has left investors scrambling for yield in a low-rate, low-return market, with a few changing the way they viewed their mandates.
Germans like to think of their economy as the “engine” of the eurozone: when it comes to bailouts for countries such as Cyprus it is to Berlin that its currency partners turn. But this role of eurozone champion, and backstop, is not universally appreciated by either the German electorate or those of the rescued countries.