Global News: Biden and Bad debt
Inflation woes around the world and how to navigate it
The Biden administration said Friday that it is using existing student loan forgiveness programs to cancel another round of student debt, totalling $7.4 billion for 277,000 borrowers.
Our thoughts
On a very serious note, there's a debt crisis in the US! Reading the stories of how people are overwhelmed by debt and how unpaid interest is added to the capital amount and interest charged on it! It is wild and overwhelming!
Whilst the beneficiaries will be happy, these kind of 'cash hand outs' interventions are not sustainable, the cost of education needs to be reassessed- why should people be paying so much that 10yrs of working can't pay it down.
In all this. the Biden administration is looking to make people happy and win an election.✌️
African News: ETI repays $500m Eurobond
Ecobank Transnational Incorporated has repaid its $500 million five-year Eurobond, which was due today, April 18th.
The bank stated this in a corporate filing with the Nigerian Exchange Limited, as obtained by PUNCH Online on Thursday.
The Group Chief Financial Officer, ETI, Ayo Adepoju, said the bond represented ETI’s first Eurobond issuance in April 2019, noting that the repayment serves as evidence of ETI’s robust financial standing.
Our thoughts
While Ghana is still struggling with getting an agreement with its default striken, heart broken bondholders, Ecobank transnational has smoothly paid off its $500 million bond!
Even though you would ordinarily say that a corporate eurobond should have higher risk than its country’s Eurobond and should be cheaper, the reverse is the case! Corporate Eurobonds have proven to be more expensive.
Why?
1. They are very illiquid- buyers don’t sell.
2. Low supply: Corporate entities don't issue as much in terms of quantity because they have smaller balance sheet sizes compared to governments
3. A default by a corporate entity will receive intense scrutiny / investigation to be sure there was no fraud or illegality at play. This has actually led to CEOs going to jail. So companies tend to be careful when it comes to their bond obligations- providing additional comfort for investors!
A corporate eurobond is a good addition to your portfolio. Eurobond investment conversations coming soon.
Nigerian News: Nigeria's galloping inflation
Nigeria's inflation kept climbing in March, reaching a 28-year high of 33.20% in annual terms, driven by soaring food and energy costs despite central bank rate hikes aimed at halting its ascent.
The latest data from the National Bureau of Statistics marks the 15th month in a row that consumer inflation had risen. It was 31.70% in February.
Our thoughts
We unpacked this inflation bruhaha on smooth FM.
I explained the following
Why Currency appreciation from 1800 to 1000 isn’t going to slow inflation overnight
Unpacked the ‘magic’ CBN is doing with FX
Explained the economic impact of Band A pricing
See replay here:
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