Middle East & Turkey
Dana Gas said this week it would pursue debt restructuring talks with creditors in a bid to retain more capital. The company is looking to restructure a US$700mn sukuk maturing in October this year, according to multiple reports, the company's third debt restructuring in 5 years.
Turkey is marketing its first sovereign bond since the referendum vote that secured a stronger executive presidency. The sovereign is looking to place a 30-year US dollar denominated benchmark sized bond, with IPTs of around 6.125%, according to data from Reuters - about 5% tighter than its existing 2045s, its longest-dated bonds to date.
Turkish lender Yapi Kredi has secured a new dual tranche loan from a syndicate of 48 local and international lenders. The bank secured a 1-year US$306mn tranche and a 2-year €956.5mn tranche, with the proceeds used to refinance existing liabilities. All-in pricing on the loans was LIBOR+145bp for the 1-year tranche and and LIBRO+220bp for the 2-year tranche.
Türkiye Wealth Fund (TWF), the Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of IDB Group, and Catalyst Group have entered into a Joint Strategic Collaboration to develop the mortgage sector in Turkey, CPI Financial reported Friday. The collaboration will focus on identifying specific primary and secondary market interventions which have multiplying effects on the economy and act as an enabler to home ownership.
Turkish lender Fibabanka issued international bonds for US$300mn maturing in 2027 with a 7.75% coupon. Notes were sold at a price of 99.997% with an initial yield of 7.8998%. Citigroup, and Standard Chartered Bank managed the deal.
The Oman Investment Fund (OIF) has closed general syndication of a US$600mn, the proceeds of which will be used to acquire the government's 51% stake in Omantel. The facility, raised by OIF subsidiary United Telecommunication Ltd., carries a 5.25-year tenor and is split between a US$450mn conventional facility and a US$150mn Islamic tranche. Citi acted as underwriter on the facility, with Banca IMI/ Intesa Sanpaolo, Kuwait Finance House and National Bank of Abu Dhabi joining the transaction as Underwriters and Bookrunners.
The National Bank of Kuwait is considering issuing fresh unsecured bonds, according to multiple reports and banking sources. NBK, the country's largest lender by assets, could issue up to US$500mn in new senior unsecured notes by the end of May.
Qatar National Bank (QNB), the largest lender in the Middle East by assets, announced it is planning to apply for an investment banking licence in Saudi Arabia, where low oil prices are expected to encourage more asset sales and debt raising. This comes after Citigroup applied for a license after a 13 year absences, while Credit Suisse is said to also be considering obtaining a banking permit in the kingdom.
ACWA Power Management and Investments, a Saudi Arabian power company, issued international bonds for US$814mn maturing in 2039 with a 5.95% coupon. Notes were sold at a price of 100% with an initial yield of 6.039%. CCB International, Citigroup, Jefferies, Mizuho Financial Group, National Commercial Bank, Standard Chartered Bank acted as joint bookrunners.
Abu Dhabi Commercial Bank (ADCB), the UAE second largest bank, plans to issue a senior unsecured dollar bond, Reuters reported. The transaction is expected to be of benchmark size, which usually means at least US$500mn. Four unspecified banks have been hired to manage the deal.
South African Finance Minister Malusi Gigaba said this week that the country could regain its investment grade credit rating with sacrificing initiatives aimed at bolstering further financial inclusion, according to a report in Reuters. Investors and analysts are concerned the country could deviate from previous fiscal consolidation plans.
The Philippines' Central Bank, Bangko Sentral ng Pilipinas, is likely to keep rates unchanged at its forthcoming policy meeting next week. Earlier this year the Bank lowered its inflation forecast from 3.5% to 3.4% in 2017.
India's credit markets are expected to grow at around 12% for fiscal year 2018, according to a note from Indian credit rating agency ICRA. The rating agency anticipates the bond market is likely to outpace new loan disbursments, in part because many of the country's lenders' assets are under stress due to rising NPLs. “ Credit growth for banks is likely to remain muted at 7-8% during FY2018, as capitalisation profile of public sector banks remains weak to support credit growth, investment demand is yet to display a revival and the debt markets continue to offer more attractive pricing for better-rated corporates in comparison to banks’ benchmark lending rates. Deposit growth for banks is likely to drop from the levels of 11.8% at end-March 2017 to around 5-7% at end-March 2018 as improvement in cash availability would enable continued CASA withdrawals during Q1FY2018. Moreover, banks may continue to reduce their deposit rates, amidst low credit pickup and surplus liquidity," explained Karthik Srinivasan, Group Head-Financial Sector Ratings, ICRA, in a research note.
Bank of China Limited's Singapore Branch issued international notes for US$600mn maturing in 2020 carrying a 3MLIBOR+77bp coupon. The notes were sold at par. Bank of China, DBS Bank, OCBC, and Standard Chartered Bank managed the deal.
The China Foreign Exchange Trade System (CFTES) has started accepting applications from bond market makers seeking clearance to participate in a bond connect scheme with Hong Kong. Plans for a "Bond Connect" programme have been in the making since Beijing launched a scheme allowing two-way trading between the Hong Kong and Shanghai stock markets in 2014.
Sri Lanka issued bonds for US$1.5bn maturing in 2027 with a 6.2% coupon. Notes were sold at a price of 100% with a n initial yield of 6.2%. CITIC Securities International, Citigroup, Deutsche Bank, HSBC, ICBC, JP Morgan, Standard Chartered Bank managed the transaction.
Reserve Bank of India, the nation’s banking regulator, expects to resolve the country’s 60 largest delinquent-loan cases in nine months, Bloomberg reported, citing persons familiar with the matter. The Central Bank plans to set up a secretariat to oversee the resolution process for the biggest defaults by loan amount, following the cabinet’s approval of plans to amend the country’s Banking Regulation Act and give more powers to the RBI to govern lenders.
Indonesia’s economic activity increased marginally year-on-year during the first quarter, with the GDP growing 5.01% year on year, marking a slight increase from 4.94% growth in the December quarter. In quarter-on-quarter terms GDP contracted 0.34% during the three months ended March, improving from a fall of 1.77% in the fourth quarter.
Mexico's Central Bank on Friday sold all of the US$200mn it had offered in a renewal of foreign exchange hedges that are due to expire in 62 days, with demand more than three times supply in the auction that aims to support the peso. The bank sold US$1bn at the start of March in the first of a series of auctions for the hedge contracts, offering maturities ranging from 30 to 360 days, according to Reuters.
Panama issued international bonds for US$1.5bn maturing in 2047 with a 4.5% coupon. Notes were sold at a price of 99.759% with an initial yield of 4.515%. Bank of America Merrill Lynch, Morgan Stanley managed the transaction.
US trade deficit with Mexico reached a near 10-year high in March, following the collapse of the peso triggered by Donald Trump’s presidential victory, which has led to more production moving to cheaper facilities in Latin America. The trade gap in goods with Mexico stood at US$7.03bn in March, a 30% jump compared to the year-ago period and the highest level since October 2017. The peso is currently trading at around the 19 per dollar mark, remains some ways off from the 13 per dollar level it was trading at in 2014.
Engie Brasil, the Brazilian unit of Engie SA, is mulling participating in a round of auctions for airport operating licenses in the country, a senior executive said on Thursday, quoted by Reuters, underscoring the growing allure of infrastructure assets in Latin America's largest economy. Engie Brasil could take part in upcoming auctions or even bid for existing licenses, the source added.
Brazilian energy company AES Tietê Energia raised BRL1bn through the sale of a dual-tranche debenture in the local market. The company raised BRL682.3mn in notes maturing 2022, and BRL317.7mn in notes maturing 2024. Banco Bradesco led the sale.
Argentinean lender Banco Macro issued a US$300mn equivalent local currency bond with a five-year tenor and a 17.5% coupon.
Fitch Ratings upgraded to "CCC" from "RD" the LT Int. Scale (local curr.) credit rating of El Salvador while affirming the “CCC” of its foreign currency debt. Both outlooks are stable.
Fitch Rating said that sluggish growth and fiscal deterioration in the first quarter of 2017 has underscore the pressure on Chile A+ rating. This pressure led to a revision in the Outlook to Negative last December. As Fitch indicated at that time, failure of growth to materially recover or sustained deterioration in public debt metrics could lead to a downgrade.
Russia, CIS and Europe
The Russian Finance Ministry will reduce its hard currency purchasing by a factor of eight in May, compared to April, when it bought an equivalent of RUB69.9bn, following lower than expected energy sector revenues – RUB46bn less than was set in the budget. The ministry expects to spend RUB8.5bn on hard currency in the month running up to June 6, according to a statement.
Rosneft’s debt rose by 4% in the first quarter of 2017, reaching RUB1.96tn (US$33.73bn), marking a 22% increase from Q12016, or a 45.6% increase in dollar terms.
Romania's Central Bank left its monetary policy rate at 1.75% but lowered the minimum reserve rate on bank's foreign currency liabilities by 200bp to 8% to help counter a contraction in foreign currency credit in the banking system.
The Russian rouble was one of the biggest losers this week in currency markets, dropping 1.7% to hit a near 7-week low of 58.38 per dollar following a drop in crude prices.
The Central Bank of Georgia raised the minimum supervisory capital requirement for banks to GEL50mn (approx. US$20.5mn), up from GEL12mn, in a bid to help limit risks at banks with low capitalisation.
The Czech Prime Minister has reversed plans to resign following a row with the country's Finance Minister over a dispute related to the Minister of Finance's business dealings. Earlier this week PM Bohuslav Sobotka said he along with a number of senior cabinet members would resign in a show of protest over Minister of Finance Andrej Babis's failure to allay concerns he didn't avoid taxes illegally in a bond sale through a company he owned.