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Emerging Market Credit Daily Roundup

Ezdan launches second benchmark sukuk – thousands out protesting Zuma in South Africa – Union Bank plans NGN50bn rights issuance – Mozambique to investigate former President in relation to undisclosed loans – Tarjeta Naranja, Tierra del Fuego keep the Argentine credit pipeline alive – Peru records impressive loan growth – Yanzhou Coal Mining Co. places benchmark notes – India’s farmer debt relief programme criticised by CB governor

Apr 7, 2017 // 3:40PM

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Middle East

Qatari real estate giant Ezdan Holdings said this week it has successfully raised US$500mn through the sale of its second sukuk. The sukuk, issued under the company's US$2bn sukuk programme, attracted about US$1.2bn in demand from nearly 130 investors.

 

Africa

Thousands of people were out protesting in major South African cities against President Jacob Zuma on Friday, demanding he quit after a cabinet reshuffle triggered the latest crisis in his presidency. Zuma's sacking of Finance Minister Pravin Gordhan caused rifts in the ruling African National Congress (ANC) and led to Fitch and S&P Global Ratings’ downgrade of South Africa to "junk".

Fitch became the second rating agency to downgraded South Africa's credit rating to sub-investment grade after recent cabinet reshuffle that saw well-respected Finance Minister Pravin Gordhan and his deputy dismissed. Fitch changed its outlook for South Africa to stable from negative. Fitch's downgrade to BB+ from BB- on both foreign and local currency debt follows a similar move by S&P Global Ratings, which also cut South African foreign debt to "junk" status. Downgrades to junk from the two agencies could see South Africa drop out of some widely used global bond indexes and force international funds which track them or which are prohibited from holding sub-investment grade securities to sell.

Moody's Investors Service has placed the Insurance Financial Strength (IFS) and related debt ratings of several South African insurance groups and related entities on review for downgrade. The ratings action follows the review for downgrade of the Baa2 debt rating of the Government of South Africa, which was prompted by the abrupt change in leadership of key government institutions.

Nigeria's Union Bank plans to raise NGN50bn (approx. US$164mn) in the second quarter this year via a rights issue, the bank's CEO said this week. The bank will look to boost its capital buffers as it looks to double down on the agribusiness sector, Emeka Emuwa said on a quarterly results call with analysts.

Alibert Products Nigeria Limited has secured a NGN1.2bn loan from the Nigeria Export Import Bank (NEXIM) to help finance the company's expansion efforts.

The IMF says Nigeria’s budget deficit will probably exceed Federal Government estimates because the country’s revenue from taxes and state companies will be lower than forecast. The multilateral lender said this week that the government deficit is likely to reach upwards of 3.7%, higher than the 2.8% initially projected. “The larger deficit would likely have to be financed domestically, further raising yields and crowding out private-sector credit,” the IMF said.

Mozambique's attorney-general has requested that the country's banks provide details of former President Armando Guebuza’s accounts in addition to those of about 17 other officials as part of a probe into US$2bn in previously undisclosed government loans, Bloomberg reports. Last year it was discovered that state-owned ProIndicus and Mozambique Asset Management hit over US$1.1bn in loans.

Goldplat has secured a KES200mn (approx. US$2mn) loan from London-based investment house Scipion Capital to finance the expansion of its Kilimapesa gold processing plant in Lolgorian, Trans Mara West.

 

 

Americas

In Peru, loans grew 3.78% year-on-year in February according to ASBANC, a Peruvian banking association. Loans at the end of February totalled PEN159mn. Inflation in Lima edged up to 1.3% in March, one of the highest monthly variations in inflation recorded since the same time in March 2008.

Venezuela's PDVSA said this week that it has commenced bank transfers to bond holders with April maturities on its 2027s and 2037s. The company owes investors about US$3bn in April, putting further pressure on it the oil giant amidst one of the most severe recessions yet seen in Venezuela.

Argentine clearing and settlement agent Balanz Capital Valores SA is in the market for a ARS200mn bond, according to a regulatory disclosure filed with the country's capital markets regulator.

The province of Tierra del Fuego successfully raised US$200mn in 10-year bonds this week. The province, which has been mulling the sale since September last year, received over US$700mn in orders. The notes were sold at 98.100% to yield 9.25% and carries a 8.95% coupon.

Tarjeta Naranja sold a US$250mn peso-linked note this week. The notes maturing 2022 were sold at Badlar+325bp.

Argentina's Central Bank approved Banco Santander Rio S.A.'s acquisition of the retail portfolio of Citibank N.A., clearing the final obstacle to conclude the deal. The acquisition will lead to an immediate 120-basis-point drop in Santander Rio's Tier 1 ratio from 12.24% as of March 2017.

Argentina's capital markets recorded about ARS16.84bn in deal flow in February, according to the country's capital markets regulator. Total financing for the first two months of 2017 stood at ARS51.43bn, representing a 341% year on year increase.

Navistar Financial, S.A. placed MXN225mn (approx. US$12mn) in short-term notes this week. The notes maturing December 2017 carry a 9.09% coupon. The deal was arranged by Intercam Grupo Financiero and Grupo Financiero Interacciones.

CECO Centros Comerciales, S.A. is planning to sell a MXN1bn (approx. US$53mn) bond maturing 2032, which is expected to price as early as Friday. The sale is being arranged by Actinver and Banorte.

Grupo Inbursa subsidiary Banco Inbursa hit the international markets this week to place a US$750mn Eurobond, the company announced. The notes due 2027 carry a 4.375% coupon and will be used to strengthen the bank's capital structure.

Puerto Rican power utility PREPA and its creditors have reached a new deal to restructure US$8.9bn in debt through new issuances with longer maturities, the US territory's government announced on Thursday. The agreement, which must be approved by Puerto Rico's federally appointed oversight board, could save US$2.2bn in debt servicing costs over five years - US$1.5bn more than originally expected.

 

Asia

China's Yanzhou Coal Mining Company Limited hit the international bond market this week for a US$500mn trade priced at par to yield UST+8.3%. CMB International Capital Corporation, China Silk Road International Capital, and Deutsche Bank managed the debt sale.

Central China Securities, a local brokerage, is proposing the issuance of convertible bonds, according to a report from Reuters. The company is said to be looking to raise RMB2.7bn (approx. US$391mn) in six-year money.

A controversial debt relief programme for farmers implemented in Uttar Pradesh, India's largest state, is copping some flak from India's Central Bank governor for "undermining an honest credit culture." Urjit Patel said at a press conference this week that the programme will have a negative impact on the credit sector and weigh on the country's GDP. The debt relief programme benefits over 21 million farmers who owe up to INR56bn cumulatively.

India's Muthoot Finance plans to raise up to INR20bn (approx. US$311mn) through the sale of non-convertible debentures, the company said this week. The sale will consist of both secured and unsecured notes issued in the local market, with an option to retain oversubscription.

IndusInd Bank became the latest Indian lender to ready itself for the sale of fresh Basel III compliant capital boosting bonds. This week the company passed a resolution that would enable it to sell up to INR10bn in non-convertible debentures on the local market.

India's Central Bank maintained its benchmark repo rate at 6.50% along with the neutral monetary policy stance it adopted in February and said "the future course of monetary policy will largely depend on incoming data on how macroeconomic conditions are evolving.

AK Capital Finance, the non-banking finance arm of AK Capital Services, raised Rs235 crore (approx. US$36.4mn) in corporate bonds this week - its debut in the local capital markets. The non-convertible debentures were split into 5 and 10-year tranches yielding 9.55% and 9.7%, respectively.

The Philippines are preparing to implement a tax amnesty that is expected to boost revenue to pay for its ambitious spending plans, Finance Secretary Carlos Dominguez said. The government will target tax evaders and beef up compliance before adopting an amnesty program, following the footsteps of Indonesia, whose nine-month tax amnesty boosted government revenue by more than US$10bn.

 

Russia, CIS and Europe

Sberbank’s profits were 54.3% up for this quarter year on year and stood at RUR154bn, according to the Russian bank’s reported, quoted by RBC news channel. Percentage income rose by 4% year-on-year, reaching RUR281bn.

Russia’s metallurgy giant Norilsk Nickel could be set to offload its African daughter-company Nkomati to a Middle Eastern investment consortium. In 2014, the Russian giant sold its stake in Nkomati to a local metal mining company BCL, which has since then failed to complete the payment even as Norilsk Nickel was forced to lower the cost amid falling nickel prices. BCL was eventually liquidated by the government of Botswana and the Russian company filed a lawsuit against the Botswanan government in the London High Court. Now, according to an RBC report, an investment conglomerate associated with the UAE royal family, Emirates Investment House (EIH), has approached the government with an offer to buy BCL and its debts.

The board of directors of Russia’s FosAgro has approved a new debt financing programme that could see the agriculture giant issue up to US$500mn in Eurobonds as soon as this month, Russia’s agency Interfax reported, citing sources.

Russia is set to sell a new Eurobond around May-June this year, Konstantin Vyshkovsky, head of the Finance Ministry’s state debt department, was quoted as saying by local news agency.

The Czech National Bank dropped its euro peg in a widely anticipated move this week that led the Czech koruna to new heights. The euro slid about 1.3% against the koruna to hit CZK26.721 before falling back to CZK26.621 Friday.

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