PUBLIC AUCTION
Why investors avoided Barclays Africa issuance
Low pricing and ‘divorce’ from the UK parent are factors that deterred bond investors
Bond investors avoided Barclays Africa’s debt issuance, which raised less than half the banking group’s target, due to inappropriate pricing, "divorce" clouds and a lack of clarity around bank resolution regulations. At a public auction on Monday, the banking group offered R1.5bn of subordinated debt, but raised only R642m at a spread of 378 basis points above the benchmark three-month Johannesburg Interbank Agreed Rate (Jibar), said the bank’s head of treasury, Deon Raju. The pricing was too low to consider the transaction, said Conway Williams, head of listed credit at Futuregrowth Asset Management, which manages R170bn in fixed-income assets. The "divorce" with its UK parent and what it would mean for Barclays Africa was also a consideration, he said. In the second half of 2016, Barclays Africa raised R2.2bn at Jibar plus 400bps, said Raju. Pent-up investor demand had compressed spreads, making the debt capital markets attractive to issuers, said Williams. "We are concerned that ...
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