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Rpt africa money worthy cassava transformed into lucrative cash crop


some rural Africans may lie in a crop that has sustained them with calories for centuries but has generated virtually no wealth for their poor countries. Cassava - with its starchy root used to make tapioca - thrives in Africa's tropical climates, through drought or deluge, but maize and other crops have had distinct advantages over the hardy tuber. Until now. Cassava can remain in the soil for a couple of years but its main drawback has been that it has to be processed within 48 hours of harvesting or it spoils. An unlisted Dutch-based company called DADTCO has developed a processing method for cassava and dispatches a mobile unit with the equipment to rural villages, so farmers don't have to harvest their crop until it arrives. The implications could be revolutionary on a continent where much economic activity still centres on small-scale farming. The potential has already been spotted by global brewer SABMiller which has started making beer from cassava in northern Mozambique.

"This creates we believe a fly-wheel for commercial cassava production in Mozambique," Mark Bowman, the brewer's managing director for Africa, told the Reuters Africa Investment Summit in April."In the short term 1,400 or 1,500 farmers benefit directly. We expect we can grow that up to 6,000 farmers as the product grows," he said. DADTCO chief executive Peter Bolt told Reuters that similar projects are being rolled out in Zambia, Ghana and South Sudan with more to follow."Our target is to roll out in 26 or 27 sub-Saharan African countries in the next couple of years," he said in a telephone interview from his Netherlands base.

MORE THAN BEER And it's not only brewers that are focusing on cassava. Unilever , the Anglo-Dutch consumer goods giant, is targeting the root to make sorbitol, a key ingredient in toothpaste and other products.

Unilever and some of its business partners are currently in talks about investing in a starch complex to process cassava into starch or sorbitol in Nigeria, which is the world's biggest producer of the root and a big market for Unilever's 3 billion euro a year Africa business."We are already in exploratory talks to source 100,000 tonnes of cassava per year for processing in Africa into sorbitol for use in our oral care products like toothpaste," said Frank Braeken, Unilever's executive vice president for Africa. It remains to be seen how far the "cassava revolution" can go but it surely raises new hope on the economic and food security fronts for the world's poorest continent. When it comes to pure sustenance and survival, cassava is hard to beat because of its durability, even if maize and other staples generally have higher starch contents. According to the International Institute of Tropical Agriculture, 37 percent of Africa's dietary energy comes from cassava and per capita consumption on the continent is close to 80 kgs per year. But instead of being grown primarily for household consumption, expect more cassava to be stored in the ground for eventual sale. Almost like money in the bank.

Trlpc oil plunge hits energy loans


Dec 5 The precipitous drop in the oil price is raising energy companies' borrowing costs in the global loan market, reducing the amount that they can borrow or pricing them out of the market altogeter and hitting secondary loan prices. The plunge in the oil price to below $70 per barrel for Brent crude, from $100 in September, could also make it difficult for some companies to meet covenants on existing loans and prompt lead banks to ask for extra protection on future deals."Oil prices will be a major consideration for banks looking to lend to oil clients. Banks will be looking closely at how it will impact certain credits and how to structure these loans so that they have the necessary security elements and protection," a European banker said. Energy companies have taken advantage of cheap debt to finance exploration and new production, especially in the US leveraged loan market. Lending to oil and gas companies totals $465 billion so far in 2014, according to Thomson Reuters LPC data - the highest annual total ever, and 29 percent higher than the previous record high of $359 billion in 2007. Average secondary loan prices for US oil and gas companies have dropped to 94.53 percent of face value, down from a high of 100.01 in late January, according to Thomson Reuters LPC data. The secondary market fall heralds a rise in primary loan pricing. US oil services companies, such as Abaco Energy Technologies, have had to offer substantial concessions to investors to get deals done, including hiking margins to around 700bp and deepening discounts to painful levels for companies and arranging banks. Exploration, production and field development companies trying to build capital expenditure, including Vine Oil & Gas, are also having to pay up to tap the market.

"The midstream business overall has held up pretty well. It's really the upstream and services sector that have been hit the hardest," a second banker said. Arrangers Barclays and Wells Fargo are sitting on an $850 million bridge loan for Sabine Oil & Gas which funded the company's merger with Forest Oil Corp and was intended to backstop a bond that has not been issued. Pricing on the bridge loan of 675 basis points (bp) increases by 50bp every 90 days after funding. The bridge loan had a cap of 9.25 percent until September 2, which increased to 9.5 percent until November 1 and then to 9.75 percent. If the high-yield bonds are issued at a higher rate than the cap, the arranging banks have to pay the difference, which is typically done by offering a deeper discount.

The repayment of Russian oil giant Rosneft's $14.8 billion bridge loan is still on track, but the long-term prospects for loan repayments in an already beleaguered market could be grim, despite the Russian central bank's $420 billion foreign exchange reserves, bankers said."If the situation does not get better, we could see a countrywide moratorium put on foreign debt, with (Russian) companies defaulting and looking to restructure their loans," said a third banker. SMALLER DEALS

Even well-established national champions, such as Angolan state oil company Sonangol, have had to reduce the amount that they are able to borrow as the falling price of oil increases the amount of oil that they will have to produce to cover structured trade finance loans, bankers said. Sonangol is in the market with a $1.5 billion loan, which is smaller than its last facility, a $2 billion pre-export loan that signed in July. State-owned Egyptian General Petroleum Co is also in the market with a $1.5 billion three-year deal. Hungarian oil and gas group MOL signed a $1.55 billion refinancing loan at the end of October, which paid a competitive 115bp over Libor that the company would not be able to achieve now."It is too early to say how oil pricing will affect the syndicated loan market, but if prices continue to fall, a repricing of MOL's loan could be possible," said another European banker. The rising cost of borrowing is deterring some companies from tapping the market altogether. US firm Atlas Energy postponed a $155 million opportunistic refinancing due to adverse market conditions. Houston-based C&J Energy Services was also forced to postpone a $650 million leveraged loan on Friday for the same reason. The biggest impact is expected to be on smaller companies, such as Tullow which has oil fields in Ghana and Uganda, and US shale firms with high capital expenditure costs, which could become takeover targets if valuations dip."Lending will not stop, but banks will be more cautious. They can't suddenly close the tap but it will hit funding for expansion and exploration projects," a banker said.