Global News: Amazon to back Anthropic with $2.75b
CBN and Nigerian Banks - Recapitalization race is on!| We are hiring
The tech giant said it will spend another $2.75 billion backing Anthropic, a San Francisco-based startup that’s widely viewed as a front-runner in generative artificial intelligence.
Our thoughts
Big tech giants like Microsoft, Amazon, Facebook, Apple, and Google are on a shopping spree, buying up smaller AI companies and investing in AI startups.
Why? Because AI has actually become crucial in tech.
But it's not just about buying these companies; there are challenges. Rules and regulations, fast-changing technology, and the costs of AI development all need to be managed.
So AI is the new rave. Everyone is investing in it, but understand this- they are all taking bets. Not all the bets will go right. In fact, most will go wrong. But the winner is the one that takes the bet that gets it right and quickly too!
African News: After 3yrs in default, Zambia has reached an agreement with its bond holders
Zambia reached a debt restructuring deal-in-principle with its international bondholders on Monday, bringing the southern African country close to finishing a complex process that has lasted more than three years and been beset by numerous delays
Our thoughts
Zambia was the first African country to default on its eurobonds ($3billion) as a result of the pandemic-driven economic downturn. The default happened in 2020 with prices of the said bond dropping to as low as $30 per unit. Since the default, bondholders have stopped receiving interest payments.
A restructuring is simply agreeing new repayment terms with its bondholders. While we don't have the full details of the new agreement. We can tell you for free- bond investors are NOT going to get their full $100 back!
This is the risk of investing in eurobonds! The country needs to generate enough USD to settle its obligations unlike the case of local bonds where the central bank can print cash to pay back!
FYI, Ghana ($13billion) and then Ethopia ($1billion) are in default at the moment. All three are currently in negotiation with bond holders- championed by the IMF under its 'debt rework architecture ' called Common Framework.
Shine your eyes, for sovereign entities (ie countries), their reserves are a clue to the likelihood of default.
Nigerian News: CBN announced revised minimum capital base for banks
Days after urging Nigerian banks to expedite action on the recapitalisation of their capital base in order to strengthen the financial system, the Central Bank of Nigeria (CBN) on Thursday, March 28, 2024, unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation at N500 Billion.
Our thoughts
Recapitalization simply means 'get fresh capital'. The last time we had this kind of announcement was in 2004 when banks were required to have N25bn minimum capital! Can you just imagine how far we've come from then!
Things to note about this announcement:
In calculating their current status (ie how far from target they are), banks are only allowed to consider their registered/ authorised/ paid up capital with the corporate affairs commission.
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