Appetite returns for Africa commodity finance

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10 September 2009

Higher commodity prices, big deals and oversubscriptions – are banks back in a big way for sub-Saharan Africa? Dickon Harris examines the latest round of structured commodity deals that have hit the market.

This article appears in the September 2009 print edition of Trade Finance under the headline Coming out of the big sleep

There is no denying the impact the crisis has had on Africa. The effects were delayed by the limited, or decoupled, integration of the region’s capital markets with the rest of the world. The subsequent lack of liquidity coupled with the more devastating drop in commodity prices, slowed most trade finance activity in the region at the beginning of the year.

Fast forward six months and the signs of a sub-Saharan African recovery look increasingly promising. Banks are nearing the end of their restructuring process, prices for commodities generally have risen and the debt capital markets have stabilised. As a result international banks appear to be eyeing the region with interest once more.

The recovery is of course not going to be immediate. The high dollar funding costs...

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