Africa

The global health and economic crises gripping Africa are hurtling the region into its first full recession in a quarter of a century. Economic growth in Africa, which had been forecast at 3.2 per cent, is now expected to be between zero and 1.0 per cent, according to the UN Economic Commission for Africa, the Financial Times reported in a commentary. The crisis highlights the needs for urgent economic and financial measures to help soften the blow. The G20’s decision to suspend debt service for the poorest countries will help. But Africa’s needs are much bigger and urgent.

A vote on a restructuring plan for loss-making South African Airways (SAA) was delayed until next month on Thursday, after some creditors and trade unions secured an adjournment after months of wrangling over the airline’s future, Reuters reported. The administrators, who took over SAA in December after almost a decade of financial losses, published their restructuring plan last week and now expect the vote to take place on July 14.

Holders of Zambia’s Eurobonds are squaring up for what is likely to be a complex and lengthy debt-restructuring process. A group of lenders owning about a third of the nation’s dollar bonds, and in contact with another third, have formed a committee to negotiate with the government, Bloomberg News reported. Newstate Partners LLP will advise the creditors, who didn’t disclose who they were. Lazard Ltd. is representing Zambia. Zambia is looking to overhaul as much as $11 billion in foreign debt as part of efforts to unlock emergency funding from the International Monetary Fund.

Australian-listed oil and gas company FAR Ltd said on Wednesday its Senegalese unit had defaulted on its obligations to the Sangomar joint venture, as the company looked to sell its interest in the project, Reuters reported. The company owns 15% of the Sangomar oil and gas field being developed off Senegal, while Cairn Energy holds 40%, Australia’s Woodside 35%, and Senegal’s national oil company Petrosen 10%, which it has the right to increase to 18%.

Fitch Ratings treats some amend and extend (A&E) exercises initiated by stressed corporate borrowers as distressed debt exchanges (DDEs), eventually leading to restricted defaults (RDs), Fitch Ratings reported. Since the coronavirus pandemic began affecting Europe in March 2020, Fitch has classified 11 transactions in its EMEA bond and loan portfolio as DDEs, which will contribute to default rates rising towards 4%-5% by end-2020 from 1% in 2019.

South Africa’s public enterprises ministry on Wednesday urged creditors to back a restructuring plan for South African Airways (SAA), saying it was the only way to rescue the loss-making airline, Reuters reported. Creditors are due to vote on the plan on Thursday, but one of the creditors - private airline Airlink - is in court on Wednesday trying to prevent the vote from happening. State-owned SAA’s administrators published the proposal last week after repeated delays and months of wrangling.

Administrators in charge of South African airline Comair said on Tuesday they have been given an extension to June 30 to submit a restructuring plan for the carrier, Reuters reported. Earlier in the day the administrators said they had received a cash offer for the carrier from a company they did not name. The administrators, who had been expected to present a restructuring plan for the airline on Tuesday, asked creditors for another week - until June 30 - to finalise the cash offer before presenting the plan.

South Africa plans to oppose an application by regional airline Airlink to put South African Airways (SAA) into provisional liquidation and prevent a meeting of SAA’s creditors to discuss a restructuring plan, the government said on Monday, Reuters reported. Airlink was a franchisee of state-owned SAA for over two decades, an arrangement that allowed SAA to sell tickets and fly passengers on Airlink flights. SAA still owes some fees to Airlink, making the latter an unsecured creditor.

A group of creditors of South African retailer Edcon has made a court application to halt meetings scheduled for Monday to consider a proposed restructuring plan for the company which is under bankruptcy protection, Reuters reported. Edcon, which owns department store chain Edgars and budget retailer Jet, entered a form of bankruptcy protection in April after its sales were hit after the coronavirus crisis lockdown. Edcon, which opened its first Edgars store in Johannesburg in 1929, had already been struggling due to falling local demand and slow economic growth in South Africa.

Two South African unions on Friday rejected job cuts proposed to rescue South African Airways, which has cost the government more than a billion dollars to stave off bankruptcy and will cost it about half that again to reform, Reuters reported. State-owned SAA went into a form of bankruptcy protection in December, and since then state-appointed administrators have been trying to see what they can salvage. Unions had been in discussions with them and had previously accepted that some job cuts would be necessary.