Middle East & Turkey
Syndicated lending in the GCC has hit a four year low, according to figures compiled by Bloomberg. Borrowers in the GCC took US$19.2bn in syndicated loans in 2017, a drop of 65% on the previous year. Meanwhile, gulf borrowers tapped the international capital markets for about US$42.7bn so far this year, a 46% surge over the year before.
Dubai's Meeras Hodling, a government-owned real estate developer, issued a US$400mn sukuk in the international markets last week, according to a report in Reuters. The bond was priced at par to yield 5.112%, the news agency reported. Emirates NBD, Noor Bank and Standard Chartered were joint coordinators on the transaction, which was also participated by Dubai Islamic Bank, Sharjah Islamic Bank and Warba Bank.
Yields on Egypt's six-month and one-year treasury bills fell at an auction as foreigners bought large volumes of government debt following the Central Bank's decision to raise key interest rates this month. The average yield on the 182-day bills dipped to 20.441% from 20.661%, while yields on the 357-day bills dropped to 20.494% from 20.588%.
The South African rand strengthened late this week after Fitch announced it would keep its credit rating of the sovereign unchanged, avoiding a second cut to two notches below "junk". The rand strengthened from ZAR13.117 per US dollar Thursday to ZAR12.895 on Friday after Fitch affirmed the country's sub-investment grade rating with a stable outlook. Spreads on 10-year benchmark government bonds also narrowed by 6.2bp between Thursday and Friday.
South African long term institutional investors have pared back their holdings of local currency government bonds while foreign portfolio investors increase their share to record levels, according to data from Reuters and the Johannesburg Stock Exchange. Local pension funds' share of domestic treasury notes fell to 27.2%, a 4.5 year low according to Reuters, while foreign portfolio investors have increased their share of holdings to 39.4%, the highest level on record.
Colombian lender Davivienda plans to borrow up to COP1tn (approx. US$342mn) through the rest of 2017, according to the bank's president. The lender plans to tap both the international and local capital markets this year, in part to refinance COP500bn coming due this year.
The Financial Industry Regulatory Authority (FINRA) has banned John Batista Bocchino, a former Morgan Stanley trader, from working in the industry after he concealed around US$190mn in Venezuelan bond trades. Bocchino was forbidden from trading the notes, which he concealed through misnamed accounts, because Morgan Stanley restricted trading on them due to money laundering concerns.
Brazilian engineering and construction holding company LC-EH Participações e Empreendimentos hit the local market to place BRL40mn in simple non-convertible debentures. Sale of the notes due 2020 was managed by Banco ABC Brasil.
Telecoms solutions provider Vogel Telecom placed a BRL62mn debenture in the local market this week. Sale of the simple, non-convertible notes due 2020 was managed by Banco Santander.
Brazilian electricity transmission subsidiary of Isolux Energia, Xingu Transmissora de Energia S.A., placed BRL550mn in the local capital markets this week. Sale of the notes due 2018 was managed by BTG Pactual.
Uruguay is set to meet with international investors to discuss the possible issuance of a global peso denominated bond. The sovereign has meeting scheduled in London, New York and Los Angeles in the upcoming weeks. BBVA, Bank of America Merrill Lynch y Morgan Stanley are arranging the meetings.
China Exim Bank issued tapped the international markets with a US$300mn bond maturing in 2020 and 3M LIBOR USD + 0.6% coupon. Notes were sold at a price of 100%. ANZ, Bank of China, Bank of Communications, Barclays, Credit Agricole CIB, KGI Securities and Mitsubishi UFJ Financial Group managed the deal.
The Reserve Bank of India (RBI) begun “prompt corrective action” (PAC) Dena Bank, a state-run lender, over its high bad loans and negative returns on assets. Dena Bank's losses widened in the March quarter as bad loans increased to 10.66% of from 6.35% a year ago. The RBI issues a PAC to spur lenders to deal with bad debts, as one of the measures intended to tackle a record US$150bn bad debt that has plagued Indian banks.
Indian Prime Minister Narendra Modi and Russian President Vladimir Putin announced plans to explore the creation of an 'independent' credit rating sector in a bid to counter what they see as an inherent bias towards the US and other countries, including China. In a meeting in St Petersburg this week, the two leaders also pledged to harmonise their respective laws relating to credit rating agencies.
Moody's reaffirmed its position on India's worrying debt levels in a statement this week as the country's Prime Minister among others hit out at global rating agencies for a perceived bias towards other countries. "We view ongoing central government deficit reduction as supportive of India’s credit profile,” Moody’s said in a note. “However, the recent widening of Indian state deficits has more than offset the narrowing of the central government deficit."
The Indian government has signed a US$36mn 5-year loan agreement with the World Bank for the Himachal Pradesh Public Financial Management Capacity Building Programme. The programme is designed to boost efficiency and transparency around the budgeting process.
PT Indonesia Infrastructure Finance, a state-owned infrastructure financing organisation, inked a IDR1.5tn (approx. US$112.7mn) loan this week with Bank Mandiri. The credit facility carries a floating rate coupon and a 3-year tenor, with the proceeds going towards new infrastructure development.
Maldives will issue international bonds for US$200mn maturing in 2022 with a 7% coupon. Notes were sold at a price of 100% with an initial yield of 7%. Bank of Communications acted as the sole bookrunner.
Russia, CIS and Europe
Norilsk Nickel issued international bonds for US$500mn maturing in 2022 with a 3.849% coupon. Notes were sold at a price of 100% with an initial yield of 3.849%. Citigroup, Gazprombank, ICBC, Mizuho Financial Group, Sberbank CIB, Societe Generale and VTB Capital managed the deal.
The International Finance Corporation (IFC) announced that it had invested GEL108.3mn (US$45mn) in Bank of Georgia's first local-currency bonds sold outside the country. Bank of Georgia, the country's largest lender by assets, priced GEL500mn worth of three-year lari-denominated bonds at 11%. The Reg S/ Rule 144A senior unsecured notes were sold at a price of 100%, while J.P. Morgan and Renaissance Capital acted as joint bookrunners.
Russia will issue a sovereign Eurobond when it is “technically ready”, Finance Minister Anton Siluanov told local media. Siluanov stated that Moscow aimed to issue US$3bn in new debt and swap another US$4bn in old Eurobonds for new ones. "We are not bound by any deadlines or schedules. It's in our interest to find the best window of opportunity," the Finance Minister said. VTB Bank will arrange the Eurobond issue, while Sberbank and Gazprombank will help arrange the swap.