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Emerging Market Credit Daily Roundup

QIB prices five-year sukuk – ICBC Dubai issues two-tranche US$700mn bond – Bank Muscat is set to issue debut 5-year OMR25mn sukuk - Kuwait gets on board for further OPEC production cuts – Banque Misr signs US$500mn loan with CDB – Petrobras issues US$4bn bond – Uralkali gathers offers for 3-year local bond worth up to RUB10bn – Poland’s PKO BP plans to redeem PLN1.6bn in subordinated bonds issued in September 2012

May 16, 2017 // 3:12PM

Middle East & Turkey

ICBC Dubai issued a two-tranche international bonds worth US$700mn. The first tranche was for US$400mn maturing in 2022 with a 3M LIBOR USD + 0.87% coupon. The second part was worth US$300mn maturing in 2020 with a 3M LIBOR USD + 0.77% coupon. Bonds were sold at a price of 100% and BNP Paribas, Citigroup, Credit Agricole CIB, ICBC, Standard Chartered Bank managed the deal.

Qatar Islamic Bank (QIB), the Gulf state’s largest Islamic lender by assets, has set the final spread at 135 basis bps over mid-swaps for its planned five-year dollar sukuk, Reuters reported. Initial price guidance was released earlier in the day at 145-155 bps over mid-swaps, before being tightened to 140-145 bps over the benchmark. Order books for the senior unsecured Islamic bond, part of a US$3bn sukuk programme, topped US$2.1bn. Citi, Emirates NBD Capital, HSBC, Noor Bank, QInvest and Standard Chartered Banks are managing the deal.

Al Baraka Banking Group is set to issue a USD-denominated RegS registered unrated additional tier 1 perp NC5 sukuk. The lender mandated Standard Chartered Bank as global coordinator and Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, KFH Capital, Noor Bank, QInvest and Standard Chartered Bank as joint lead managers and bookrunners to arrange a series of fixed income investor meetings in Asia, Middle East and Europe commencing on May 18.

Oman’s Bank Muscat is preparing to issue its debut Series 1 5-year OMR25mn sukuk issue with a green shoe option of a further OMR25mn, commencing its Meethaq Sukuk Programme on 21 May. All the regulatory approvals are in place for the programme that will be open to all Omani and Non-Omani individuals as well as institutional investors.

Kuwait joined Saudi Arabia and Russia in supporting an extension of oil-output cuts by OPEC and other global producers through the first quarter of 2018 to help trim global stockpiles. Extending the cuts at already agreed-upon volumes is needed to reach the goal of reducing global stockpiles to the five-year average. Oman, a non-OPEC producer like Russia, expressed support the same day for curbs to continue until the end of March. OPEC is due to meet with fellow producers on May 25 to decide on the extension.


Banque Misr, the second largest state-owned bank in Egypt, has signed a US$500mn loan agreement with the China Development Bank (CDB) to strengthen its foreign liquidity position, according to an official statement from the Egyptian Ministry of Investment and International Cooperation. The loan will be used to finance a number of projects involving Chinese companies in Egypt, as well as funding domestic imports from Beijing, and has a term of eight years.

Senegal opened the books on its first US dollar deal since 2014. The sovereign has released price guidance for a bond due May 2033 at 6.50% area.  Citigroup, JP Morgan, Natixis, Societe Generale and Standard Chartered are managing the deal.

Nigerian workers from an oil labour union have extended a strike to oil majors Chevron, Shell and Eni subsidiary Agip in protest over the sacking of members from Exxon Mobil Corp, the union's general secretary said on Tuesday, quoted by Reuters. Lumumba Okugbara, of the Petroleum and Natural Gas Senior Staff Association of Nigeria, said union representatives would meet Exxon Mobil management on Tuesday for talks over a strike that began last week.

South Africa's Finance Minister Malusi Gigaba said on Monday the treasury would use its ZAR500bn (US$40bn) annual procurement budget to transform the economy and give more support to black-owned businesses. "The strategic use of state procurement is an important lever to grow black business," Gigaba told a business dinner in Johannesburg. "The state getting value for money is important but this aim should be considered in conjunction with our economic history."


The Central Bank of Peru reduced reserve requirements for banks to 44% of total deposits from 46%, both for the local currency —the Peruvian Sol and US Dollar—in an effort to foster growth is positive Moody's Investors Service affirmed. However, the rating agency expects real GDP growth for the year to fall to 3.7% from 4.0% in 2016.

Brazil oil giant Petrobras is preparing to take advantage of a drop in borrowing costs to sell US$4bn in dollar-denominated bonds. The state-run company is selling more of its existing notes due in 2022 and 2027 that were first issued in January, as well as securities that mature in 2044 that were placed three years ago.

Brazil's Central Bank is looking to implement regulations this year to oversee financial technology companies that are expanding rapidly in Latin America's biggest economy, director Otavio Damaso said in an interview with Reuters. Increased innovation and a growing number of fintechs, as technology startups in the financial sector are known, are "very positive" for the efficiency of Brazil's financial system, Damaso said on Monday. Damaso said the bank also wanted to facilitate the entry of foreign banks in the local market by eliminating the need of a presidential decree to continue the approval process.


Non-performing loans of commercial banks in Thailand are expected to peak later this year as the country's economic recovery has yet to take hold, a senior central bank official told Reuters. Banks may see their lending increasing 4-6% in 2017 if production and investment pick up in the second-half of the year, the report added. Banks' NPLs rose to 2.94% of lending in the first quarter of this year from 2.83% in the previous period.

Indonesia's President Joko Widodo signed an emergency government regulation that gives the tax authority access to account information held by financial institutions, including banks, Reuters reported. The regulation was signed last week as part of Indonesia's pledge to join the global initiative of sharing financial information for tax purposes, according to a copy of the regulation.

The EU Court of Justice ruled that approval from national legislatures was needed in addition to support from top European bodies to enact the free trade pact with Singapore. This decision by the top European court is not expected to kill the agreement with the Southeast Asian city-state, but will present obstacle to its implementation.

Russia, CIS and Europe

International Bank of Azerbaijan foreign-currency senior unsecured debt ratings have been downgraded to Caa3 from B1 by Moody’s Investor Service, the agency reported Monday. The rating action followed the announced debt restructuring, which is expected to result in credit losses for creditors in excess of 20%. Review for downgrade will be resolved following finalization of the restructuring plan and receipt details of possible further government support for the bank. Dollar bonds issued by the International Bank of Azerbaijan fell on Tuesday upon the news, with the bank's US$500mn bond maturing 2019 dropping 1.5 cents to 83.95 cents.

Russia’s Uralkali plans to collect offers for its new 3-year local RUB-denominated bonds on 23 May, Bloomberg reported on 15 May, with the amount expected to be between RUB10bn and RUB15bn. This follows the announcement that another Russian corporate, Eurochem, will collect offers for its new 3-year RUB10n local RUB-denominated bonds on 18 May, with coupon guidance set at 8.9-9.1%.

Russian Post expects to collect bids for RUB5bn 10-year exchange bond on Thursday, with first coupon guidance standing at 8.75–8.9%, corresponding to an 8.94–9.1% yield to a 4-year buyback offer. VTB Capital, Otkritie Financial Corporation (FC) Bank, and Raiffeisenbank will act as organizers, while Alfa-Bank, Sviaz-Bank, and Sovcombank will be co-organizers, Interfax reported Tuesday.

Poland saw year-on-year GDP growth of 4.1% in the first quarter (on a seasonally adjusted basis), up from 1.6% in the previous reading for the end of 2016 and well ahead of forecasts.

Poland's largest bank PKO BP says it plans to redeem all subordinated bonds issued on Sept. 14, 2012, for a total nominal value of PLN1.6bn (US$422bn), with further plans to issue subordinated 10-year bonds worth up to PLN1.7bn.

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