MTN plans bond sale to raise $1bn NCC fine-By Omodele Adigun

MTN Group has appointed four banks to organise fixed-income securities investors’ fora as it seeks fund to settle the $1 billion fine imposed by the National Communications Commission (NCC), among other pressing needs.
The Johannesburg-based company said in a statement on Wednesday that it has mandated Barclays Bank Plc, Bank of America Corp.’s Merrill Lynch, Citigroup Inc. and Standard Bank Group Ltd. to arrange a series of fixed-income investor meetings in the US and the UK starting from tomorrow (Friday, September 9) to gauge investor interest in a possible bond offering as it seeks funds to pay for dividends, capital expenditure and a record $1 billion (N330 billion) fine in Nigeria.
“The net proceeds of the issue of the notes will be used for capital expenditures, to pay down working capital facilities and general corporate purposes,” MTN said in a preliminary prospectus sent to potential investors. “We expect our annual capital expenditure in the medium term to increase in the coming years as we increase our capital expenditures in Nigeria and South Africa.”
The dollar-denominated bond offering “is expected to follow, subject to market conditions,” the mobile carrier said.
MTN’s move to attract funding comes after the company reported its first-ever half-year loss this month, partly caused by an agreement to settle the fine with Nigerian regulators and government. The subscriber base of 233 million didn’t grow during the six months through June, while MTN is struggling to repatriate 15.4 billion rand ($1.1 billion) tied up in its Iran unit.
“Pre-dividend free cash flow won’t cover payments of dividends and the fine in Nigeria this year and in 2017,” Alexandre Dray, an emerging-markets credit analyst at Gimme Credit LLC in Tel Aviv, said in e-mailed comments. “Therefore, the company needs to raise new debt or equity to keep a comfortable liquidity position.”
MTN issued a $750 million note in 2014 that matures in 2024, according to data compiled by Bloomberg. The company sold a 1.25 billion rand bond in 2010, which matures in July next year.
After reaching a record high in February, the yield on MTN’s dollar-denominated note has fallen as the carrier negotiated and finally successfully settled talks over its Nigerian fine. Having peaked at 7.11 per cent on February 19, the note’s yield is now 4.81 per cent and its spread to a similarly dated treasury bill has narrowed.
MTN is due to pay an outstanding N280 billion of the Nigerian fine in six instalments over the next three years. The first payment, which MTN Nigeria says it has already settled, was due on July 8.
The shares fell 2 per cent to 118.34 rand as of 3:40pm in Johannesburg, on track to close at the lowest price since January 21. They have declined about 38 per cent since October 26 when the NCC fine was first reported.
The wireless carrier will consider a higher full-year dividend than the forecast 7 rand-a-share “if operating conditions improve materially,” the company said on August 5. MTN paid 13.10 rand a share in 2015, while the payout was set at 2.50 rand for the half-year through June.
The company “is right to consider issuing bonds to make the most of the low-yield environment,” Dray said. “This is a good time to sell bonds as there is a strong demand for emerging-market corporates amid a hunt for yield.”

Culled from Sun

Global manufacturing growth to remain low in 2016, says UNIDO report — by walter Ukaegbu

Home / Business / Global manufacturing growth to remain low in 2016, says UNIDO report

World manufacturing growth is expected to remain low in 2016 due to weakened financial support for productive activities, according to a report released yesterday by the United Nations Industrial Development Organisation (UNIDO).
The report states that, with financial uncertainty still looming across Europe, foreign direct investment has not yet reached the 2007 pre-crisis level.
According to UNIDO, world manufacturing output is expected to increase by 2.8 per cent in 2016. The current trend indicates that, in contrast to recent years, there will be no breakout from the low-growth trap in 2016. Manufacturing production is likely to rise by 1.3 per cent in industrialized countries and by 4.7 per cent in developing economies.
By the end of 2016, the growth rate performance of China, the world’s largest manufacturer, is likely to further decline from last year’s 7.1 per cent to to 6.5 per cent this year.
Similarly, downward growth rate trends are expected in Japan, Europe, and the United States.The report contains expected annual growth rate estimates for 2016, as well as observed growth rates for the second quarter of this year.
According to UNIDO, lower industrial growth rates pose a challenge for the implementation of Sustainable Development Goal 9, which aims to significantly raise the share of manufacturing in the economies of developing countries.
World manufacturing output rose by 2.2 per cent in the second quarter compared to the same period in the previous year. Most of the growth was contributed by developing and emerging industrial economies where manufacturing output rose by 4.9 per cent.
In industrialised countries growth was marginal at 0.2 per cent. In Europe, the uncertainty following the Brexit affected the growth rate performance in manufacturing in the second quarter of 2016, below 1.0 per cent for the first time since 2013.
Lower growth was also observed in the Russian Federation and the United States, where manufacturing output rose at the marginal rate of 1.0 per cent and 0.3 per cent respectively.
In Japan, manufacturing output fell by 1.8 per cent.
Among Latin American economies, manufacturing output fell by 3.2 per cent in the second quarter, amid a continuing production decline in the region. Manufacturing output plunged by 6.7 per cent in Brazil, and by 4.2 per cent in Argentina. Asian countries largely maintained higher growth rates. Manufacturing output rose by 5.6 per cent in Indonesia, 3.9 per cent in Malaysia and 13.5 per cent in Viet Nam. However, the growth figures showed a sudden 0.7 per cent drop in production in India.Estimates from the limited available data showed that manufacturing output rose by 2.5 per cent in Africa. South Africa, the continent’s largest manufacturer, significantly improved its growth performance to 3.3 per cent in the second quarter. Higher growth rates of 8.3 per cent and 7.6 per cent were achieved in Cameron and Senegal.The UNIDO report also presents growth estimates by manufacturing sectors. The production of tobacco fell for the second consecutive quarter, declining by 2.6 per cent. Developing economies maintained higher growth in the production of textiles, chemical products and fabricated metal products, while the growth performance of industrialized economies was higher in the pharmaceutical industry and in production of motor vehicles.

Sourec: Sun