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The Daily Roundup

Qatari sovereign fund and Glencore buy 19.5% of Russia’s Rosneft – Ghanaian election too close to call – Egypt’s inflation soars to 19.4% - Ecuador announces new 10-year bond – Malaysia’s reserves fall by US$2bn in 2 weeks - The First Gulf Bank PJSC (FGB) and National Bank of Abu Dhabi PJSC (NBAD) agree merger deal – Ukrainian and Georgian citizens allowed visa-free travel to the EU

Dec 8, 2016 // 6:08PM

MIDDLE EAST & TURKEY

Iran plans to revalue its rial tenfold and revert to the currency's old name, the toman, according to a bill approved on Wednesday by President Hassan Rouhani's cabinet, the official Islamic Republic News Agency (IRNA) said. Pending parliament approval, the renamed currency would be worth around 3,200 to the dollar at official exchange rates and 3,900 at unofficial rates.

Shareholders in First Gulf Bank PJSC (FGB) and National Bank of Abu Dhabi PJSC (NBAD) have approved the proposed merger of the two banks, which will create the largest financial institution in the United Arab Emirates (UAE) with assets of approximately AED655bn (US$178bn). Following the issue of new NBAD shares, FGB shareholders will own approximately 52% of the combined bank, with NBAD shareholders owning approximately 48%. The Government of Abu Dhabi and Government related entities will own approximately 37% of the merged entity.

AFRICA

Morocco will issue its first ever Islamic bond in the domestic market in the first half of 2017, the finance minister said on Thursday. The size of the sukuk is of yet undecided, but the issuance is expected to coincide with the launch of a market for Islamic banking.

Kenya and the World Bank are in talks about financing a US$150mn solar-and-wind project in the country’s remote, off-grid north-eastern region. The government of East Africa’s biggest economy is building more power plants as it plans to triple capacity to 6,766 megawatts by 2020, from the current 2,327 megawatts.

Ghanaian President John Mahama and his main opponent in Wednesday’s elections were neck and neck after the release of early provisional results as both candidates claimed the lead in the race for the presidency. On Thursday figures shown by various television channels in Ghana were too close to call, with Akufo-Addo at 48.96% and Mahama at 48.72%, with 76 of 275 constituencies counted.

Egypt’s urban consumer prices rose the fastest in eight years in November, driven by a 21.5% increase in food costs after the government floated the currency and raised fuel prices. Annual urban inflation accelerated to 19.4%, while monthly inflation climbed to 4.8%, according to the state-run statistics agency CAPMAS.

Thee African Development Bank (AfDB) has approved a seed equity capital investment of US$25mn into the African Domestic Bond Fund (ADBF). The ADBF was conceived as part of the African Financial Markets Initiative (AFMI), dating back to 2008, with are to contribute to the development of local debt markets in Africa through strengthening the domestic bond market infrastructure and investing in local currency-denominated debts.

Nigeria has appointed Citigroup, Standard Chartered, and Stanbic IBTC to arrange its planned $1bn Eurobond sale, finance minister Kemi Adeosun said on Wednesday. The issuance is expected in the first quarter of 2017.

AMERICAS

Ecuador announced a new 10-year bond on Thursday, taking advantage of rising crude prices to make its third foray into the US dollar market this year. The oil exporter is marketing the deal to investors at initial price thoughts of low 10% area, according to sources quoted by Reuters.

Regional development bank IDB has agreed to loan Argentina US$300mn for road works and a further US$120mn for provincial investments.

ASIA

Malaysia's international reserves fell by nearly US$2bn in the last two weeks of November, with some economists expecting the total to decline further this month. Malaysia's Central Bank said yesterday that gross international reserves stood at US$96.4bn as of Nov 30, down from US$98.3bn on Nov 15, the lowest level since mid-March.

RUSSIA, CIS & EUROPE

Russia said on Wednesday it sold a stake in oil giant Rosneft for €10.5bn (US$11.3bn) to Qatar’s sovereign wealth fund and commodities trader Glencore, confounding expectations that the Kremlin's standoff with the West would scare off major investors. The deal to acquire a 19.5% stake in Rosneft from the Russian state came as a surprise, with most market-watchers anticipating a buyout deal instead, whereby Rosneft would purchase its own shares from the state. Wednesday’s RUB600bn bond issuance was seen as an indirect confirmation of this plan; instead, the proceeds from the bond were distributed among a number of Rosneft’s subsidiaries in the form of interest-free 10-year loans, the company announced on Thursday.

The Russian government will not provide official directives to oil companies to reduce production in accordance with the OPEC and no-OPEC agreement, the country’s vice-president Arkady Dvorkovich said on Wednesday. According to the official, the state has no authority over the matter. The announcement followed earlier calls by heads of major oil and gas companies, namely Lukoil’s Leonid Fedun, for the government to provide directives about how Russia’s pledged 300000 barrel per day production cut will be distributed.

The European Union will soon let Ukrainians and Georgians visit the bloc without needing a visa after officials said a deal had been struck on Thursday to end an internal EU dispute that had been holding up the promised measures. Late-night talks involving EU member states and the European Parliament had reached a compromise on the terms of a mechanism that can be used to suspend the visa-free schemes in emergencies.

Ukraine’s second attempt to auction its state-owned Odessa Portside Plant failed to attract any bids, the State Property Fund said on Wednesday - a major setback for the country's Western-backed push for privatization and reform. After the failure of the initial auction in July, the government dropped the floor bidding price by more than half to around US$200mn, but still failed to draw any offers.

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