Africa

Hard-currency bond investors have already downgraded South Africa to junk. The premium investors demand to the country’s dollar debt rather than U.S. Treasuries climbed above the emerging-market average in October, shortly before Moody’s Investors Service cut the country’s credit outlook to negative, Bloomberg News reported. It has now been above the mean for the longest period since Bloomberg started tracking the data in 1997. Previously, South Africa’s sovereign spread crossed above the average for brief periods only during times of stress.

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Zimbabwe’s troubled national airline has failed to secure outside investment, dealing a blow to government plans to sell state-owned assets and secure much-needed revenue, Bloomberg News reported. The airline, which in Oct. 2018 was placed under administration, a form of bankruptcy protection, received expressions of interest from 10 international investors and had short-listed three bidders.

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South Africa’s rising country risk is putting upward pressure on interest rates, even as inflation expectations decline, with credit-rating companies contributing to the negative sentiment, according to the central bank, Bloomberg News reported. Moody’s Investors Service cut its 2020 economic growth forecast for South Africa to 0.7% from 1% on Monday and said the nation’s relatively high real interest rates are constraining expansion.

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The rand strengthened the most among emerging-market currencies on Friday as investors assessed President Cyril Ramaphosa’s pledges to overhaul South Africa’s electricity industry and curb government spending, Bloomberg News reported. While offering little that is new on the planned restructuring of Eskom Holdings SOC Ltd., Ramaphosa announced sweeping measures Thursday to address power shortages and reduce dependence on the debt-stricken utility.

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An application by two trade unions to block job cuts at struggling state-owned airline South African Airways (SAA) was rejected by the country’s labour court on Friday. SAA is fighting for survival after being placed under a form of bankruptcy protection in December, Reuters reported. The unions argued that SAA’s administrators were planning far-reaching job cuts without holding the proper consultations required by the country’s labour law.

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South African state airline SA Express is under a form of bankruptcy protection known as business rescue, a spokeswoman for the airline said on Thursday. Her comments come after SA Express lost a court battle with a contractor, logistics firm Ziegler, earlier this month, Reuters reported. SA Express, which flies to domestic and regional destinations, is a separate business from much larger state carrier South African Airways (SAA), which entered business rescue in December.

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South African labor union Solidarity began a legal process to block plans to use the state pension fund to help debt-stricken power utility Eskom Holdings SOC Ltd, Bloomberg News reported. The action adds to opposition from other employee groups resisting a proposal by the Congress of South African Trade Unions, the nation’s biggest labor organization, to cut Eskom’s debt by 254 billion rand ($17.2 billion). Cosatu had expected to reach a pact with business on the idea before President Cyril Ramaphosa presents his state-of-the-nation address on Thursday, but has pushed back that timeline.

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Zambia will cancel or downsize project loans worth about $5 billion as the nation tries to rein in runaway external debt that’s been increasing its risk of default, Bloomberg News reported. The government has about $7 billion in pipeline external debt -- loans contracted but not yet disbursed -- and plans to slash this to about $2 billion, Finance Minister Bwalya Ng’andu said on Wednesday.

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Ghana is seeking to prosecute a former finance minister, industry regulator and deputy central bank governor in a bid to stamp out alleged collusion with company executives that helped contribute to the West African nation’s biggest banking crisis, Bloomberg News reported. The former officials are being charged along with nine other banking executives on charges ranging from money laundering to defrauding depositors in the aftermath of a three-year industry clean-up -- the costs of which could escalate to 20 billion cedis ($3.7 billion).

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Squabbling between South Africa’s government and the state-owned airline’s bankruptcy administrator is threatening its chances of survival, Investec Ltd.’s chief executive officer said. President Cyril Ramaphosa in December placed debt-ridden South African Airways in business rescue, a local form of bankruptcy protection, Bloomberg News reported. Over the past few days, there’s been a flurry of conflicting messages from the government and the business-rescue practitioners, leaving investors and customers unclear about whether the carrier has a future.

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