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Demand for Namibian assets surges following more oil discoveries

Published

3 months ago

August 28, 2024

Interest in Namibian assets has surged since more crude oil reserves were discovered there; as a result, an index fund that tracks local government bonds is about to see its largest annual increase ever.

On both the Namibian Stock Exchange and in South Africa, there is an exchange-traded fund that tracks local government bonds. Its value has gone up over 20% in U.S. dollars since Galp, based in Portugal, found out in April that the Mopane field could hold at least 10 billion barrels of oil.

There have been at least 12 other big oil companies interested since then.

With a return of almost 12% in U.S. dollars, the fund is on track for its best year ever. An ETF that follows the closely watched JPMorgan developing markets bonds index has gained 3.6% so far this year.

Since the finding, yields on local sovereign bonds have dropped even more. Since April, yields on bonds due in 2037 have dropped about 150 basis points, and yields on papers due in 2050 have dropped around 200 basis points.

“Most of the bonds issued are held by Namibian pension funds, but we are seeing some foreign buying now. We have seen massive yield compression … since the oil discoveries were first announced,” said Rowland Brown, co-founder of Cirrus Capital based in Windhoek.

Brown also said that Namibian government bonds were still settled on paper, so foreign investors were looking to the ETF to get more invested in the resource-rich country.

Major international energy companies are interested in the southwest African country because of several big finds along its coast in the past few years, even though the country hasn’t produced any oil or gas yet. Topaz Energy and Shell say they plan to start producing in 2029 or 2030.

The local stock market index has grown by more than 19% so far this year in U.S. dollars, while MSCI’s index of developing markets stocks has only grown by 7.5%.

The Namibian dollar has gotten stronger against the US dollar by 4.5% this year, ending a four-year losing run. Since December 2019, LSEG data shows that total central bank reserves have gone up by nearly $1 billion.

People will be interested in any changes to Namibia’s economic policy after the end-of-the-year presidential election. This is because the country has a lot of economic promise after finding oil.

VenturesNow

IMF mission concludes 4th loan program assessment in Egypt

Published

13 minutes ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

VenturesNow

Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.