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Ecobank’s $183 million impairment losses highlight hazards in sovereign bonds

Published

7 months ago

May 14, 2024

Ecobank, a pan-African banking group, has more than doubled its impairment losses on Ghana’s problematic Eurobonds to $183 million, highlighting the extent of risk that African lenders face when investing in state bonds.

The Lome-based lender also stated that it had removed around $39 million in interest income collected on the $13 billion Ghanaian Eurobonds from its 2023 financial statements due to continuing and yet-to-be-completed restructuring discussions with commercial bondholders.

The latest impairment losses represent a 144% increase from $75 million in 2022.

“As of year-end 2023, the total impairment charges on Government of Ghana Eurobonds are estimated at $183 million, a significant rise from $75 million in year-end 2022,” the lender says in its audited financial statement for 2023.

“Additionally, $26 million of modification losses were incurred on the GoG debt net of impairment charge releases due to the final settlement of the old bonds for the new bonds in February under the Domestic Debt Exchange Programme.

Ecobank operates in 35 African nations, including Kenya, Burundi, the Democratic Republic of the Congo, Ethiopia, Ghana, and Cote d’Ivoire. Moody’s Investor Service, a global rating organization, has previously urged banks against excessive lending to governments, warning that their credit profiles risk being lowered alongside those of governments facing liquidity constraints.

Zambia secured an agreement with its creditors in March to restructure $3.5 billion Eurobonds, bringing respite to Lusaka, which has been grappling with a long-running debt problem. As part of the agreement, bondholders agreed to extend payment dates, allowing Lusaka to continue receiving funding from a $1.3 billion International Monetary Fund (IMF) project.

Related Topics:Ecobank Featured sovereign bonds

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Moroccan annual inflation rises to 0.8% in November

Published

3 hours ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

1 day ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”