Market Commentary
Oil fell for a fourth day on Wednesday as concerns about slowing European demand offset worries about Middle East supply disruptions stemming from the Israel-Hamas conflict in Gaza. Brent crude futures dropped 28 cents, or 0.3%, to $87.79 a barrel as of 0627 GMT, while U.S. West Texas Intermediate crude futures were down 31 cents, or 0.4%, to $83.43 a barrel.
KENYA: Kenya to Receive $500 Million Syndicated Loan in November
Kenya is set to receive $500 million (Sh75 billion) in November through a syndicated loan facilitated by the Trade and Development Bank (TDB). TDB has been mandated to mobilize up to $1 billion (Sh150 billion) for Kenya in the current fiscal year. The syndicated loan aligns with Kenya’s strategy to tap into external financing arranged by development finance institutions and multilateral organizations to reduce reliance on Eurobonds. The IMF has also disclosed that Kenya is in talks with the fund for additional financing to strengthen its economic program and address funding requirements.
GHANA: Debt Defaults Taking Long to Resolve-Fitch
Rating agency Fitch reveals that debt defaults in frontier markets, including Ghana, have taken longer to resolve in recent years, with a median duration of 107 days since 2020, compared to 35 days for all defaults since 2000. The Common Framework, aimed at facilitating creditor coordination, has not expedited crisis resolution. Despite most frontier markets holding stable or positive outlooks, half are currently rated ‘B-‘ or less, with five sovereigns rated ‘RD,’ including Zambia and Ghana. Weak coordination among Chinese stakeholders played a role, but Zambia’s recent debt deal suggests progress in resolving future restructurings more swiftly.
NIGERIA: Nigeria to Forgo N12.4 Trillion ($15 BN) in Tax Waivers and Incentives by 2026
The Nigerian Federal Government is set to lose an estimated N12.4 trillion in tax waivers, concessions, and incentives between 2023 and 2026. These exemptions, benefiting a range of entities from corporations, encompass tax holidays, import duty relief, and other concessions. The figures, outlined in the Medium Term Expenditure Framework, show a projected increase in exemptions year-on-year, with value-added tax (VAT) relief accounting for a significant portion of the total exemptions in 2022. This substantial loss in revenue raises questions about Nigeria’s fiscal policy.
EGYPT: Egypt Approves Third Batch of $500 Million Samurai Bonds to Fund Budget Deficit
Egypt’s Cabinet has approved the issuance of a third batch of $500 million Yen-denominated bonds, commonly known as Samurai bonds, with a five-year tenor. This move is part of the government’s strategy to issue debt instruments to finance its budget deficit, which accounted for six percent of its GDP in FY2022/2023. Egypt recently issued its first sustainable Panda bonds in the Middle East and North Africa, which, along with Samurai bonds, aims to help narrow the government’s financial gap in the coming fiscal year.
MOROCCO: Morocco and AfDB Sign $282 Million Financing Agreements
Morocco and the African Development Bank (AfDB) have signed three financing agreements totaling over 2.9 billion dirhams ($282 million). The agreements cover healthcare infrastructure access, social coverage, and emergency assistance following an earthquake in the Al Haouz region. The deal includes $127 million for healthcare, $158 million for social programs to enhance employability, and $1 million for earthquake assistance. The AfDB has been actively involved in Morocco’s development, previously mobilizing over €400 million for healthcare and sustainable road network projects