Bull’s Eye: Would you invest in an SA infrastructure bond?


Bull’s Eye: Would you invest in an SA infrastructure bond?

Low interest rates mean there is a global hunger for yield – and a workable opportunity for SA to cash in

Jeremy Thomas

We are in a state of peak introspection, at the precise point where we have to lift our eyes from our thin domestic gruel and contemplate life beyond finger-pointing and grandstanding blether.
Mark Barnes wrote this week about the Turkish post office and its Africa-wide mission to be a banking-postal service hybrid driven by e-commerce. For now Turkey has linked up with Tunisia, and the SA Post Office is a potential partner. It is exciting stuff for the logistics industry, opening up the continent to products and services the developed world takes for granted.
So too China’s belt-and-road initiative, exporting capital across southern Asia and Europe, into Africa. The European Union is giving it the lazy eye, but it cannot ignore that distressed Italy and Greece are hitching their skirts that way, particularly since it targets rail, road, power and port infrastructure so badly neglected in the post-crisis period of austerity.
The FT this weekend reported on the unlikely revival of synthetic collateralised debt obligations – the things that almost drove the global financial world into oblivion in 2007/8. Hedge funds, and even some pension funds, like them and tell us that this time will be different. The point is that there is an appetite for high yield, risk be damned. With interest rates so low in the US, investors have no option but to look to innovative capital markets for their returns.
And if these “burrito” shells (you never know what’s inside them) are being bought, then we can be pretty sure that ready cash is eyeing other, more transparent, forms of investable debt. Such as emerging markets. With workable blueprints for infrastructure backed by enabling legislation and funding structures underwritten by institutions motivated by nothing grander than self interest. There is no call for vague notions of altruism when profits are to be made.
In these glum days many of us might look back mistily at how SA had the great fortune to rebound from the financial crisis on the back of the 2010 Fifa World Cup. It was a rosy world: people had jobs. It was a slightly hallucinatory premonition of the way things could be, always. There was no accusation, unlike now, of companies being on an “investment strike”. The plain fact was there was plenty of opportunity for smart spending and bankable returns.
Right now there are without doubt bipartisan parliamentary committees made up of sentient politicians drafting the policies that will add flesh to the president’s bare-bones promise to make things better. The government has, at every step, had the cooperation and advice of the best brains in the private and NGO sectors.This is a fact we can choose to belittle with our peculiar local brand of cynicism that sounds less worldly-wise than it does nastily sarcastic. So we can stand by like useless hysterics, clutching our pearls and crying, “Somebody do something!”, as if bloody Barack Obama or Fidel Castro is going to spring out and fix it.Or we can look again, see there’s no use in dangling out the begging bowl or jeering and throwing handfuls of gravel from the sidelines, and buy in to whatever’s coming next. We live in a noisy place and it’s going to be hard to acknowledge the populist necessities of realpolitik, but we must. In the clamour of our mess-hall, we have to at least cock an ear when the guy at the high table clangs a spoon against his brandy glass and asks us to listen.
The alternative will leave us like sad drunks at a bad party, whimpering, “I just want to go home!” None of us have a coherent memory of what this mythical “home’ might be (beyond, at a push, those halcyon 2010 days). We just know it means as little as somewhere warm and safe, kept up with just enough money left over to buy a few nice things. We’ll get there.

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