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Emerging Market Credit Daily Roundup

QIB issues US$750mn 5-year bond – Garanti Bank issues US$750mn 10-year international bond – Nedbank closed a US$450mn 3-year senior unsecured term loan facility - The African Export Import Bank (Afreximbank) to invest up to US$500mn in Gambia - Kenya selling two T-bonds worth US$398mn - Senegal’s US$1.1bn Eurobond more than eight times oversubscribed – Mexico investigating 7 foreign banks accused of bond price manipulations - Slovenia completes EUR2bn dual-tranche bond tap

May 17, 2017 // 4:42PM

Middle East & Turkey

Saudi Arabia’s budget next year will be “expansionary but not significantly” and in line with plans to balance state finances by 2020, Finance Minister Mohammed Al-Jadaan told Bloomberg. “Where the expansion will come is from the efficiency,” Al-Jadaan said in an interview in Jeddah on Tuesday. “We are working on that -- reducing a lot of the fat that is not necessary and then utilizing that in more productive investments.” The target for a balanced budget is central to the kingdom’s long-term plan to diversify the economy, which includes creating the world’s biggest sovereign wealth fund and privatizing some state assets.

Qatar Islamic Bank(QIB) issued international bonds for US$750mn maturing in 2022 with a 3.251% coupon. Notes were sold at a price of 100% with an initial yield of 3.251% while the book orders reached US$1bn. Citigroup, Emirates NBD, HSBC, Noor Bank, Qinvest, Standard Chartered Bank managed the deal

Garanti Bank, Turkey’s second largest private bank by assets, issued international bonds for US$ 750mn maturing in 2027 with a 5Y USD Swap Rate + 4.22% coupon. Notes were sold at a price of 100%. Banco Bilbao (BBVA), Bank of America Merrill Lynch, BNP Paribas, HSBC, Standard Chartered Bank managed the deal.

 

Africa

Egyptian President Abdel-Fattah El-Sisi promised to introduce measures to aid the poorest families, struggling with rising inflation as they brace for the Muslim holy month of Ramadan. The measures include tax breaks and increasing subsidized food, El-Sisi said in an interview. Prices tend to increase in Ramadan, which starts later this month, as end of fast brings about increased food consumption.

Fitch expressed strong concerns about South Africa's economic and political situation, the country's second largest federation of trade unions said on Tuesday after it held talks with the ratings agency. In April, Fitch cut South Africa's debt to subinvestment, citing the recent cabinet reshuffle, when President Zuma fired his third finance minister in two years and which it feared would weaken standards of governance and public finances.

Nedbank, acting through its London branch, successfully closed syndication of a US$450mn 3-year senior unsecured term loan facility. The facility was launched two months ago, with the bank seeking US$350mn from existing relationships and a select group of Asian lenders to replace a maturing US$210mn facility put in place in May 2014, with overall number of participants reaching 16. The loan will be used for general corporate purposes.

Zambia's Central Bank cut its benchmark lending rate by 150bp to 12.5%, Governor Denny Kalyalya said on Wednesday, citing lower inflation and subdued economic growth. "Among the principle reasons the monetary policy committee considered ... is the continued decline in inflation," he said. The nation's inflation was flat at 6.7% year-on-year in April, the statistics office said last month, maintaining its steady decline from more than 20% a year ago.

Angola's inflation slowed to 34.8% year-on-year in April from 36.52% in March, according to data on the national statistics agency's website cited by Reuters. Price increases on a month-on-month basis slowed 1.8% in April compared to 1.91% previously.

The African Export Import Bank (Afreximbank) will invest up to US$500mn in Gambia, its president said, in a move to boost the impoverished West African country, ignored by investors under former president Yahya Jammeh. The money will go towards tourism, infrastructure and agriculture in the tiny riverside country of about 2 million people whose finances are in disarray following Jammeh’s scandalous reign.

Kenya has put up for sale two T-bonds worth US$398mn as the government raises internal borrowing to fund activities including polls, infrastructure development and pay rise for teachers and civil servants. This issuance, which is US$107mn higher than the amount raised every month, is the largest to be ever sought through the paper by the sovereign.  The interest rate on the long-term notes has been set at 9.3% for the 10-year bond and 12.5% for the 15-year bond.

Senegal’s US$1.1bn Eurobond was more than eight times oversubscribed, as investors bet on political stability in the West African nation. The sovereign sold the 16-year notes on Tuesday with a 6.25%, after initially offering 6.5%. Investors placed US$9.3bn of orders while the money will be used for infrastructure projects, including a regional commuter train and power supply. Citigroup, JP Morgan, Natixis, Societe Generale and Standard Chartered are managed the deal.

 

Americas

The Brazilian real strengthened on Tuesday after the Central Bank resumed market intervention, providing support for the currency ahead of a key vote on pension reform. The Brazilian real firmed as much as 0.6% before losing some gains, dropping 0.34%. The Central Bank sold US$400mn worth of traditional currency swaps, according to Reuters.

Puerto Rico’s Government Development Bank has agreed a deal with some of its creditors to cut its debt burden and restructure its obligations. The organisation will transfer its assets into a new entity and issue new bonds in a deal that will see creditors take principal losses of as much as 45%. The assets to be transferred to the new entity include its loans to Puerto Rico’s municipal governments, property and excess cash, which the government said are worth US$5.3bn.

Venezuela will launch a new foreign exchange auction system on May 23, President Nicolas Maduro said in a televised broadcast on Tuesday.

Mexican authorities have mentioned seven banks, including three from the U.S., as part of a widening investigation into price manipulation in the nation’s bond market, according to Bloomberg. Local units of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, JPMorgan, HSBC, Barclays, Citigroup and Bank of America Corp. have become the focus of the probe which was launched in April this year.

 

Asia

China North Industries Group issued a US$200mn international bond maturing in 2020 with a 3.2% coupon. Notes were sold at a price of 100% with an initial yield of 3.2%. Bank of Communications, CCB International, CEB International Capital Corporation, China Merchants Bank, Guotai Junan Securities, ICBC, Shanghai Pudong Development Bank and Wing Lung managed the deal.

The Asian Development Bank (ADB) issued maiden INR3bn green bond in rupees to help finance climate change mitigation and adaptation projects in India. The bond carries a 6% interest rate with a 3.75-year maturity, falling due in February 2021.  JP Morgan and TD Securities manged the deal.

The Asian Development Bank (ADB) has completed its maiden trade finance deal in Papua New Guinea. According to Global Trade Review, it signed a credit guarantee facility with Kina Bank, a local lender, which will support US$4mn of annual trade in Papua New Guinea, including local SME importers and exporters.

Triconboston Consulting Corporation, Pakistan’s largest wind farm, secured a US$238mn debt finance package, with the IFC leading the lending. The World Bank’s commercial arm is set to provide US$66mn from its own book, and has arranged an additional US$172mn from other development banks, namely the Asian Development Bank, the Islamic Development Bank and DEG. The funds will go towards the construction of three new 50MW wind farms in the Sindh province.

Mingfa group, a Hong-Kong based real estate developer, issued international bonds for US$220mn maturing in 2020 with a 11% coupon. Notes were sold at a price of 100% with an initial yield of 11%, while Head & Shoulders Securities acted as the sole bookrunner.

Chinese Logan Property Holdings issued international bonds for US$450mn maturing in 2023 with a 5.25% coupon. Notes were sold at a price of 98.773% with an initial yield of 5.57%. AMTD Asset Management Limited, CITIC Securities International, Guotai Junan Securities, Haitong International securities, VTB Capita managed the deal.

Singapore based BOC Aviation issued international bonds for US$500mn maturing in 2022 with a 3% coupon. Notes were sold at a price of 99.471% with an initial yield of 3.13%. BNP Paribas, Bank of China, Citigroup, DBS Bank, Goldman Sachs, HSBC, Morgan Stanley, Mitsubishi UFJ Financial Group, OCBC and Westpac Banking managed the deal.

 

Russia, CIS and Europe

Slovenia completed a EUR2bn dual-tranche bond tap on Tuesday by extending the 24-year bond issued in the autumn 2016 and a 10-year bond issued in January, Bloomberg reported Wednesday. The government also bought back dollar bonds worth US$1.092bn.

EU ministers expressed their concerns about Poland’s controversial reforms to its justice system, criticising Warsaw for its plans to reform the country’s top court – a move that many see as government clamping down on the judiciary. Sweeping measures introduced by Poland’s ruling Law and Justice party would allow the government to determine what verdicts the country’s supreme court publishes.

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April / June 2020

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