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The Daily Roundup

Erdogan urges trimming interest rates – Dubai Investments nears loan finalisation – DEWA, ACWA Power close Hassyan Energy Phase 1 financing – Zimbabwe’s Hwange Power Project to go ahead – fresh corruption allegation hit Temer – Novatek gets board approval for rouble issuance

Dec 12, 2016 // 6:32PM

MIDDLE EAST & TURKEY

Turkish President Recep Tayyip Erdoğan once again urged lenders to reduce interest rates on loans after it emerged many of the nation's banks and international banks with Turkish subsidiaries were struggling to contain rising non-performing loans (NPL). Some banks operating in the country have seen NPLs rise by as much as 30% this year.

Twin bombings in Istanbul on Saturday killed 38 and wounded more than 150 people. The lira led declines among emerging market currencies in early trading Monday, rising from 2.81 to 2.88 per US dollar, a change exacerbated partly by bolstered confidence in a US interest rate hike this week.

The Turkish economy contracted in Q3 according to official data. The Turkish Statistical Institute reported the country's GDP fell 1.8% year-on-year in the third quarter, reversing the previous quarter's 4.5% expansion. Household spending dropped 3.2%, compared with a 3.7 % rise in the second quarter. Government spending surged 23.8% in Q3 after rising 13.7% the previous month.

Turkey's ruling Justice and Development Party (AK Party) has submitted to parliament a bill granting extended powers to the presidency and abolishing the prime ministry, among other major changes. The 21-article constitutional change, if adopted, would take Turkey away from its current parliamentary system, and introduce an executive presidency, a move that worries critics of President Recep Tayyip Erdogan.

Dubai Investments, which is part owned by the emirate's sovereign wealth fund, is due to close a Dhs1.1bn (US$299.52mn) loan by the end of the year, its CEO said this week. The loan, which will be used to build a residential project in the Mirdif neighbourhood in Dubai, is being provided by Abu Dhabi Commercial Bank and First Gulf Bank (FGB).

Iran signed a US$16.6bn deal for 80 Boeing passenger jets on Sunday and was said to be close to another for dozens of Airbus planes to complete what would be the biggest package of firm contracts with Western companies since Iran's 1979 Islamic revolution.

Cutting public spending has become inevitable because of the sharp drop in oil prices, Kuwait’s emir on Sunday told a new parliament that was elected partly by voters protesting against austerity policies. Kuwait is seeking to plug a budget deficit officially projected at KWD9.5bn (US$31bn) for the current fiscal year, after payments to the sovereign wealth fund.

Hassyan Energy Phase 1 PSC, a joint venture between ACWA Power Harbin Holding Company (49%) and Dubai Electricity & Water Authority (DEWA), reached financial close on the Hassyan Clean Coal Project this week. The company inked a US$2.47bn funding deal, a limited recourse project financing split into a combination of senior secured financing and a secured mezzanine tranche, with a range of regional and international lenders including the Agricultural Bank of China, Bank of China, China Construction Bank, Commercial Bank International, Emirates NBD, First Gulf Bank, Industrial and Commercial Bank of China, National Commercial Bank, Silk Road Fund, Standard Chartered Bank, and Union National Bank.

Standard Chartered, General Electric (GE) and the Trade Bank of Iraq (TBI) have signed a US$366mn memorandum of understanding aimed at meeting the growing demand for power in Iraq. Under the MoU, Iraq’s Ministry of Electricity will secure a US$366mn from the banks facility to support the financing of high-priority power and infrastructure contracts in the country.

 

AFRICA

About half a dozen officials at the Central Bank of Kenya reportedly colluded with senior executives at Imperial Bank, a collapsed Kenyan bank placed into receivership last year, to hide KES35bn in unauthorised loans and overdrafts, according to a report from the Financial Times, citing court documents.

A $1.4bn power project in Zimbabwe, the Hwange Power Project, is due to go ahead after the country's Parliament approved a US$1bn loan provided by the China Export-Import Bank.

Ghana's main opposition leader Nana Akufo-Addo won Wednesday's national election, defeating President John Mahama, electoral commissioner Charlotte Osei said on Friday. The African country’s new leader will be under pressure to deliver on his campaign promise to create jobs, restore rapid growth, build a dam in every village and a factory in every district. Ghanaians gave the previous president John Mahama just one four-year term before ousting on Wednesday.

 

AMERICAS

A former director of Brazilian engineering firm Odebrecht SA told prosecutors the company made several illegal contributions to politicians from the ruling PMDB party including President Michel Temer, according to Brazilian media, in yet another blow to the President's fortunes. Temer is currently taking the heat after it reported continued economic contraction last week, and he could face impeachment if the reports are substantiated.

Venezuela said it will remove the 100 bolivar (US$0.02) bill from circulation ahead of the planned introduction of higher denomination notes as inflation continues to put pressure on the country's currency and economy.

Brazil is to report October retail sales Tuesday, which is expected to contract -7.2% year on year, compare with -5.9% the previous month.

The Mexican Central Bank, Banco de Mexico, is expected to hike rates by between 25bp and 50bp when it meets on Wednesday this week.

Paraguay will approach the International Finance Corporation (IFC) and regional development bank CAF to find funding to rebuild the national highway Route 9, known as the Ruta Transchaco. The Paraguayan congress this week approved a US$200mn loan to the MOPC from the Inter-American Development Bank (IDB). The loan will cover the ministry's planned investment through the end of March 2017, the MOPC said. The ministry added that it expects to end the year with US$600mn in investments.

 

RUSSIA, CIS & EUROPE

Russia’s Novatek announced that its board has given a green light to the regulatory filing and registration of interest-bearing, non-convertible, Russian rouble bonds. According to the registration documents, the total maximum nominal value of the company's potential RUB bonds offering is RUB75bn (US$1.23bn) with a maturity period of up to 20 years for each bond issue. The placement of the bonds will take place at the Moscow Exchange

Poland has started marketing the first Green bond to be issued by a sovereign, setting a new milestone for an asset-class whose popularity has been growing steadily in recent years. The country has started marketing the five-year euro benchmark Green bond at 60bp area over mid-swaps.

Azerbaijan plans to move to full floating rate of the manat, starting from 2017, Azeri Central Bank head Elman Rustamov told reporters on Monday.

Romania's leftist Social Democrat Party (PSD) won Sunday's parliamentary election with about 45% of votes in both houses of parliament, official partial results from more than 60% of polling stations showed on Monday. The centre-right National Liberal Party (PNL) was trailing on about 20%, results by the Central Electoral Bureau showed.

Italian energy company Eni has agreed to sell a 30% stake in a giant Egyptian offshore gas field to Russia's Rosneft for US$1.575bn, pressing ahead with asset sales to fund investment amid weak oil prices. Eni, which currently owns 90% of the Shorouk concession containing the giant Zohr gas field, said Rosneft would pay US$1.125bn cash for the stake and would reimburse investments already carried out by Eni for around US$450mn.

Crude oil prices jumped at the opening of Asia markets Monday after OPEC and non-member producers agreed a deal at the weekend to cut output to ease a global oversupply. On Saturday, producers from outside OPEC agreed to reduce output by 558,000 barrels a day, the largest-ever contribution by non-OPEC countries, with Russia pledging to cut most among the non-OPEC countries at 300,000 barrels a day.

 

ASIA

Chinese automotive manufacturer BYD has secured a BRL1bn (US$296mn) line of credit to help finance the company's expansion in Brazil, where it will manufacture and sell solar and electric vehicle parts.

China will report October IP, retail sales, and fixed asset investment Tuesday, which are expected to rise 6.1%, 10.2%, and 8.3% year on year, respectively.

Indian telco Idea Cellular plans to issue up to Rs1,500 crore in 5-year bonds with IPTs of 7.57%, it said in a disclosure to multiple stock exchanges.

India reports November CPI Tuesday, which is expected to rise 3.9% year on year compared with 4.2% the previous month.

 

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