According to ABSA Capital principal, Anand Naidoo “the debt capital markets are on fire”. The reason for this could apparently be due to increased economic activity in South Africa and Africa as a whole.

With banks still being wary of lending, it seems that corporates have begun to use their equity as currency said Naidoo’s colleague Anthony Wilter, the co-head of investment banking at Absa Capital.

In recent months, Absa Capital has completed a number of high-profile debt market transactions which saw it take top spot on the Bloomberg 2010 Underwriter Rankings League Table. This has been on the back of a number of large deals with companies such as BMW Financial Services, Barloworld Limited and Land Bank.

Wilter and Naidoo see Absa Capital benefitting strongly from an increased Parastatal spend in the next few years as well as the Banks knowledge of the rest of the continent. According to the dynamic pairing, the parastatal entities such as Eskom, SAA, SANRA and Transnet are expected to spend in the region of R846 bn in the next few years and much of this will be raised on the debt markets.

It seems that this movement will see spin offs for certain companies and mark a serious change in the debt markets as the Banks are no longer seen as the 1st choice in terms of raising capital.

Read the full article.