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Emerging Market Credit Daily Roundup: 31 May 2017

Oman Oil mandates banks for US$1.2bn RCF – Al Baraka issues maiden sukuk – Ziraat Participation inks 1-year syndi loan – ZAR appreciates after Zuma impeachment noise fades – Tanzania cuts growth forecast – Barclays can finally sell out of SA – J&F sees record US$3.2bn fine for graft scandal – Venezuela opposition has Goldman in its crosshairs – Ecuador prices US$2bn trade – Indonesia hits the IDR, JPY markets – SEBI introduces green bond guidelines – Norilsk Nickel on the road again

May 31, 2017 // 5:28PM

 

Middle East & Turkey

Oman Oil Company has mandated a number of regional and international lenders for a US$1.2bn revolving credit facility, Reuters reports. The state-backed oil company has reportedly mandated Barclays, Bank of Tokyo-Mitsubishi UFJ, Credit Agricole, Deutsche Bank, First Abu Dhabi Bank, HSBC, Natixis, Societe Generale, Standard Chartered, and Sumitomo Mitsui Banking Corp for the 5-year transaction. Proceeds from the loan will be used to refinance an existing US$1bn facility borrowed in 2014.

Duqm Refinery, a US$7bn joint venture between the Oman's state-owned Oman Oil Company and Kuwait Petroleum International, is looking to secure a US$5bn loan to fund the construction of the project. The project includes the main processing facility, utilities, fuel storage facilities, and a package for building facilities outside the refinery. The refinery is due to come into operation in 2020.

Foreign investment in Egyptian government securities increased by 13% in the past week to hit EGP136bn ($7.53 billion), Reuters reported.

Al Baraka Banking Group, a Bahrain-based leading Islamic banking group, issued its maiden US$400mn Islamic sukuk. The Additional Tier 1 Perpetual sukuk has a five-year maturity and carries a 7.87% coupon. Standard Chartered Bank was appointed as the Global Coordinator and the Joint Lead Manager, and the transaction also included participation from Bank ABC, Dubai Islamic Bank PJSC, Emirates NBD Capital, KFH Capital, Noor Bank, and QInvest.

Saudi Aramco announced a joint venture with national shipping company Bahri, South Korea’s Hyundai Heavy Industries Co. Ltd. and Lamprell Plc to develop and operate the US$5.2bn project on the biggest maritime yard in the region, located off the country’s east coast. Lamprell shares gained as much as 14% on the back of the agreement Wednesday.

Moody's Investors Service has withdrawn Bahrain Development Bank's Ba2/Not Prime Issuer Ratings and its Ba2(cr)/NP(cr) Counterparty Risk Assessment. According to a statement, Moody's took away the rating for business reasons. At the time of the withdrawals, the long-term ratings had a negative outlook.

Growth of 3.7% in Bahrain’s non-oil sector helped to fuel overall economic growth of 3% in the country in 2016, according to the latest figures published in the Economic Development Board’s Bahrain Economic Quarterly. This growth marks an acceleration over the 2.9% pace recorded in 2015, despite significant regional and global headwinds seen this year.

Turkish participation bank Ziraat Katilim inked a 1-year US$236mn Murabaha syndicated facility this week, according to a press release from the lender. Bank ABC, Banka Kombetare Tregtare, Dubai Islamic Bank, Emirates Islamic Bank, Emirates NBD Capital, HSBC, Ktalimi Bankasi, Kuveyt Turk, Mashreqbank, Noor Bank, Standard Chartered Bank, United Arab Bank, and Warba Bank particpated with the transaction.

 

Africa

The South African rand appreciated against the US dollar in early morning trading Wednesday as the market digested news that Jacob Zuma, the country's embattled leader, resisted calls to step down and avoided a motion of no confidence from the ANC. Nevertheless, a recent Ipsos poll released Tuesday found that a majority of eligible voters want Zuma to quit; 54% of respondents said Zuma should step down voluntarily, and just 27% want him to stay put.

After prolonged discussions with the South African government, Barclays finally received regulatory approval for the sale of its remaining stake in the Barclays Africa Group. South Africa's minister of finance approved the deal, according to a statement by ABSA Bank, paving the way for Barclays to begin selling its remaining 50% stake in Barclays Africa Group. Earlier Barclays announced plans to sell Barclays Bank Egypt and Barclays Bank of Zimbabwe, as part of its continued consolidation.

Tanzania's finance minister Philip Mpango cut the country's GDP forecast for 2017 to 7.1%, down from 7.4%, as he gave a speech to parliament on Tuesday, adding that inflation is expected to remain at single digit levels and to fall to 5% in 2018.

Botswana's state-owned power utility is auctioning concessions to build a 100 megawatt (MW) solar power plant in bid boost energy security in for the southern African country. Botswana Power Corporation (BPC) announced it expects energy demand to more than double to 1,359 MW by 2035 from around 600 MW.

The Government of Cameroon signed a loan agreement with the Japan International Cooperation Agency (JICA) for JPY5.9bn (approx. US$53mn) this week. Proceeds from the loan will be used to finance the construction of a 67km motorway linking Mintom and Lélé in the south part of Cameroon. The project if being co-financed with the African Development Bank (AfDB).

 

Americas

J&F Investimentos, owners of the world´s largest meatpacker, JBS SA, agreed with Brazilian authorities to pay a US$3.2bn fine for its role in the latest graft scandals. In a statement, prosecutors in five different corruption investigations said the holding company owned by the Batista family will pay the leniency fine over 25 years, starting in December.

The Brazilian and Chinese governments have launched a joint US$20bn fund for infrastructure projects in Brazil, which is expected to begin operations at the start of July. Of the US$20bn, US$15mn were provided by Claifund, the Chinese vehicle for investment in Latin America, and US$5bn were contributed by Brazilian financial institutions, according to Global Trade Review.

Peru’s growth is expected to slow to 3% this year as flooding and ongoing corruptions scandal continue to pummel the economy, according to finance minister Alfredo Thorne. But the economy is likely to recover quickly, with growth rising to 4.5% next year and around 5% in 2019, he added.

Ecuador hit the international markets this week to place US$2bn in fresh notes across two maturities. The Central American sovereign sold US$1bn in notes maturing 2023 priced at par to yield 8.75%, and US$1bn in notes maturing 2027 priced at par to yield 9.625%. Citigroup was sole arranger on the deal.

S&P gave a “B” rating to Republic of Ecuador's latest US$2bn notes, issued earlier on Wednesday.

Mexican retailer Grupo Axo said it was the right decision to delay an IPO after it announced it secured the backing of General Atlantic. GA and Group Axo announced a deal that will see the former invest in the latter, though the terms of the deal were not disclosed. "The firm’s investment marks a substantial step forward in Grupo Axo´s expansion into the Latin American market and will further enable us to capitalize on a broad array of new growth opportunities,” Grupo Axo's CEO Andres Gómez said in canned remarks.

Venezuela's opposition has weighed in on the controversy brewing around Goldman Sachs' US$2.8bn PDVSA trade. In a statement earlier this week, the investment bank said it bought the notes "on the secondary market from a broker and did not interact with the Venezuelan government," but Julio Borges, President of the National Assembly, criticised the deal - arguing that Goldman Sachs was financing a dictatorship. You "cannot put lipstick on this pig," he said.

 

Asia

Indonesia's Ministry of Finance sold IDR4.08tn (approx. US$306mn) in Islamic bonds at an auction this week, below the initial target of IDR5tn initially earmarked for sale. The weighted average yield for Islamic T-bills maturing in December 2017 was 5.35313%, 6.83962% for sukuk maturing 2019, 7.05961% for sukuk maturing 2021, 7.24977% for sukuk maturing 2021, and 7.87946% for sukuk maturing 2031. Subscriptions fell short largely on the back of lower yields.

The Government of Indonesia hit the yen market this week to place JPY100bn (approx. US$902mn) in fresh notes across three maturities. The sovereign sold JPY40bn in notes maturing 2020 priced at par to yield 0.65%, JPY50bn in notes maturing 2022 priced at par to yield 0.89%, and JPY10bn in notes maturing 2024 priced at par to yield 1.04%. Mizuho Financial Group, Nomura International, and SMBC Nikko Capital managed the sale.

India is mulling the option of privatizing its ailing state-run Air India airlines, which is saddled with over US$8bn worth of debt. According to Bloomberg, which is citing its source in the government, the state could ask potential buyers to absorb up to INR200bn (US$3.1bn) worth of debt, but it is unclear whether the rest will be written off or reorganized.

True to its word, Securities and Exchange Board of India (Sebi) released its long-awaited rules on disclosures norms related to the issuance and listing of green bonds in India. As part of the guidelines, issuers would need to provide details of the systems and techniques employed in tracking the proceeds of the bonds, including investments made into projects earmarked in offer documentation.

Alam Maritim Resources' MYR500mn sukuk ijarah medium-term note programme has been placed on negative watch by Malaysian Rating Corporation, as the offshore support vessel provider enters into corporate debt restructuring talks with its lenders and sukuk-holders. The rating agency cited declining liquidity buffers as one of the main reasons for the move.

Vietnamese Prime Minister Nguyen Xuan Phuc this week announced plans to sign US$15-17bn worth of deals with the US for purchases of high-technology products and for services. The announcement, quoted by Reuters, was made at a U.S. Chamber of Commerce dinner.

The Asian Development Bank (ADB) has agreed a revolving credit facility and a credit guarantee facility worth a combined US$4mn with Fiji’s Home Finance Company (HFC Bank). The deal, which is set to support local exporters in key areas such as sugar, copra and other agricultural goods, is the first of its kind and follows weeks after the ADB opened its book for another nation in the region, Papua New Guinea.

 

Russia, CIS & Europe

Norilsk Nickel, a Russian metals producer, plans to offer U.S. dollar-denominated Eurobonds with maturity in April 2022, PRIME reported. Citi, Gazprombank, ICBC, Mizuho, Sberbank CIB, SG CIB and VTB Capital will manage the deal.

Russia’s gas giant Gazprom has been notified of the Ukrainian Justice Ministry’s decision to seize shares of its subsidiary Gaztranzit, as part of ongoing antimonopoly lawsuit by Ukrainian authorities. The authorities also initiated enforcement proceedings to collect around UAH190mn worth of assets. In total, Ukraine is demanding about US$6.4bn from the Russian company.

Russian gas giant Gazprom is looking to issue a benchmark-sized Eurobond denominated in Swiss francs as early as July, Russia's Interfax news agency reported this week. Last time Russia’s gas giant tapped the markets in March it issued a US$750mn 4.95% dollar-denominated Eurobond as well as a 4.25% GBP850mn note.

Russian tycoon Suleiman Kerimov confirmed on Wednesday that he agreed to sell 10% of Russia's top gold producer Polyus for US$887mn to a Chinese consortium led by Fosun International, which has been in talks with Polyus since last year. Polyus Gold International Limited (PGIL) said in a statement that it would sell 12mn Polyus shares to the Fosun-led consortium for US$70.6025 a share.

Russia’s Tinkoff Bank is set to start its roadshow for a perpetual dollar-denominated Eurobond, with J.P.Morgan, UBS, BCP Securities, BKS Pareto Securities, Region Bank and Renaissance Capital picked as organisers. Earlier on Wednesday, the lender offered to buyout its current US$200mn Eurobond maturing in 2018 at a price of 1.107%.

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