Category Archives: Team Commentary

At the August meeting of the MPC, the Bank of Namibia hiked rates by a further 25BP (following the 25 point hike in June). While not completely expected, this move is positive for the broad macro-conditions in Namibia.

More to follow…….

The Top40 and Alsi have been in what appears to be free-fall today, as BHP Billiton’s earnings miss forecasts, and the announcement that it is splitting off nickel, aluminum and other assets into a new company that could be valued at more than US$20 billion. However, we see this move as majorly over done, as earnings missed by a mere 0.7 percent, and current moves based on the company split are still speculative.

Nevertheless, Billiton is the single largest weighting in the Top40 index, at over 13 percent, meaning that a 1% move in Billiton represents 60-odd points on the Alsi. As such, the 5% sell off that we have seen today, represents a total of over 300 points on the Alsi, and captures in entirety the negative move we have seen on the index for the day so far.

Unlike today’s results, the comapny’s first half results were very positive, surprising to the upside by 8.9 percent. This divergence lead technical trader, Karin Richards ‏(@Richards_Karin), to rather fittingly, call Billiton “a tale of two halves”

As reported in today’s IJG Daily, Fitch Ratings Agency yesterday downgraded Telecom Namibia Limited’s (TN) Long-term local currency Issuer Default Rating (IDR) to ‘BB+’ from ‘BBB-‘ and its National Long-term rating to ‘A-(zaf)’ from ‘A(zaf)’, putting both ratings on a negative watch.

The agency noted that “The downgrade reflects our view that state support for TN has weakened. TN’s standalone credit profile has deteriorated with no significant evidence of government support. We also note that so far this year TN has not requested additional government support. The erosion of TN’s cash flow generation looks to continue into the rest of 2014 given a decline in fixed-line revenue and high capital expenditure.“

As such, the company’s IDR rating is no longer investment grade, and considered high risk, or “junk”. This can be expected to have a negative impact on demand for the company’s debt instruments, as most asset managers’ mandate will not allow them to invest in such.

See more here: Telecom Namibia Downgrade: Reuters