Daily Watch – Nigeria returns to international bond market, IMF reviews Ghana lending programme

Nigeria had a successful return to the international bond market after a two-year hiatus, with subscription four times the intended offer of $1.7 billion. After a long wait all year, the Federal Republic of Nigeria issued a dual-tranche Eurobond offering under its Global Medium Term Note Programme to finance the country’s 2024 fiscal deficit on Monday. The issuance, which opened and closed on Monday, was oversubscribed in excess of $9 billion and the federal government eventually took just $2.2 billion across both bonds. The federal government sold $700 million worth of the 6.5-year Eurobond maturing in 2031 at a coupon rate of 9.625% and $1.5 billion of the 10-year tenure at 10.375%.

Business activities in the country fell for the fifth consecutive month in November as inflationary pressures remained elevated, the latest monthly Purchasing Managers Index (PMI) by Stanbic IBTC Bank has shown. The report showed the headline index declined to 49.6 in November from 46.9 in October. “Rates of inflation in the Nigerian private sector remained elevated in November, further hampering business operations. There were some signs of improvement midway through the final quarter as new orders returned to growth and the decline in output softened. That said, employment was down and companies continued to lower their purchasing amid steep price pressures. Although there were some tentative signs of demand improving, companies reported that customers were often deterred by high prices,” the report said. Sector data pointed to increases in output in agriculture and manufacturing but decreases in wholesale, retail and services.

The International Monetary Fund (IMF) has approved the third review of Ghana’s $3 billion lending programme, unlocking an immediate disbursement of about $360 million, the IMF said on Monday. “Ghana’s performance under the IMF-supported program has been generally satisfactory. All quantitative performance criteria and indicative targets for the third review were met,” the IMF said in a statement. “With three successful IMF reviews in a row, it shows the determination of the government to turn the economy to winning ways. We have demonstrated uncharacteristic discipline in fiscal management,” the country’s finance minister, Mohammed Amin Adam told Reuters. “We appreciate the enormous work we still have to do, and we will do everything for the benefit of our people,” he added.

South African manufacturing activity fell in November, a local purchasing managers’ index (PMI) survey showed, as volatile demand conditions weighed on business activity. The seasonally-adjusted PMI sponsored by South African bank – Absa, slipped to 48.1 points in November from 52.6 in October, falling below the 50-point mark that separates expansion from contraction. The business activity and new sales orders sub-indices both fell last month, reversing the gains it made in September and October, Absa said. “While local inflation and interest rates have come down relative to earlier in the year, demand remains unpredictable,” Absa said in a statement. According to the bank, while global demand offered some support to South Africa’s manufacturing sector in November, a weaker rand and domestic uncertainties continue to pose risks going forward.