Cell C’s curious comeback in the bond market
Despite its equity value taking a tumble in 2019, the mobile operator is reaping the rewards of stronger government bonds globally
Cell C’s R8.9bn debt burden has been cited as one of the factors behind the slump in the shares of its largest investor Blue Label Telecoms in 2019 — yet the mobile operator’s bonds have staged a big comeback. The yield on Cell C’s dollar note due in August 2020 has fallen to 11.6% from 16.8% in early January. Lower yields show higher demand and pricing. The yield on a longer-dated bond due in August 2022, issued by related party 3C Telecommunications, has fallen to 15.5% from 21.4% in late December. But at the same time, shares in Cell C’s largest investor, 45% owner Blue Label, have fallen out of favour. The group’s stock has retreated by as much as a third in the year to date, partly on concerns that Cell C is carrying too much debt. The sharp decline in yields on Cell C’s debt could be explained by lower government bond yields globally, which “normally pull down corporate bonds also”, said Mergence Investment Managers portfolio manager Peter Takaendesa. The yield on the R208 gov...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.