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The Daily Roundup

NBAD secures US$2bn club loan – Kuwait sukuk pipeline matures 1 year after law introduced – Lago State Government pushes ahead with NGN60bn bond sale – ZAR touches new lows – LatAm currencies feeling the Fed rate hike – Mexico City issues first municipal green bond in LatAm – Uranium One, ALROSA repay loans

Dec 15, 2016 // 2:13PM

MIDDLE EAST & TURKEY

The National Bank of Abu Dhabi (NBAD) sealed a US$2bn club loan with Bank of America Merrill Lynch, Barclays, Citigroup, Credit Agricole Corporate and Investment Bank, DIFC, HSBC, Mizuho, MUFG, Natixis, Standard Chartered Bank, SMBC, Societe Generale, UniCredit Bank, and Wells Fargo. Bank of China came into the deal as limited arrangers. NBAD said it received US$3bn in subscriptions, but kept its facility at US$2bn to allow lenders to scale back their positions. The move comes weeks after the bank delayed its inaugural green bond.

Kuwait's corporate sukuk pipeline is looking quite healthy just one year after new rules were passed to facilitate their issuance, according to figures released by the country's Capital Markets Authority. The agency's chairman Nayef Al Hajraf said at a conference in Kuwait this week that corporates are currently seeking approval to issue up to US$2bn in sukuk.

 

AFRICA

The Namibian economy shrank by 1% in the third quarter of 2016 compared with a contraction of 1.2% in the second quarter, data on the statistics agency's website showed on Thursday. Mining, construction, public administration and defence sectors were the largest contributors to the decline in the quarter, the agency said.

Inflation in Nigeria continues to rise for the 13th consecutive month in November, despite the Central Bank’s decision to maintain benchmark rate at a record-high to ease the price jump. The inflation rate in West Africa’s biggest economy climbed to 18.5% from 18.3% in October.

South Africa's rand touched a near two-week low against the dollar on Thursday amid a wide-ranging emerging market sell-off following the Fed rate hike and further policy tightening for 2017. The rand fell to 14.02 per dollar, weakest in a week, recovering slightly to 13.95 later. Government bonds paralleled the currency drop, falling across the curve, with yield on 10-year benchmark rising 11bp to 9.04%.

Uganda's Central Bank lowered its Central Bank Rate (CBR) by 100bp to 12.0% as core inflation is expected to remain around the bank's target over the next year despite a pickup in inflation in November. The Bank of Uganda (BOU), which has now cut its rate by 500pb this year, left the band around CBR steady at plus/minus 3% and the margin on the rediscount rate at 4% so the rediscount rate will fall to 16% and the bank rate to 17%. Uganda's consumer price inflation rate rose to 4.6% in November from 4.1% in October while core inflation rose to 5.2% from 5.1%.

Mozambique's Central Bank left its benchmark standing lending facility interest rate at 23.25%, saying the exchange rate and other indicators have begun to evolve in the expected direction and this should pave the way for lower inflation in the short and medium term. However, the Bank of Mozambique, which has raised its rate by 13.50% this year to curb inflation, also said that it may take "necessary corrective measures" before the next scheduled meeting of its monetary policy committee in February if risks to inflation materialize.

The Reserve Bank of Zimbabwe has ordered banks to cut bank charges on withdrawals of bond notes in order to make the controversial currency more attractive to the population. Some banks were charging as much as US$4.50 per withdrawal.

The African Development Bank's Board of Directors has this week approved the institution’s borrowing programme for 2017, with the bank looking to the capital markets for up to US$8.4bn.

Several banks are refusing to renew their foreign currency swap agreements with the Nigerian Central Bank due to an erosion of confidence in the country's monetary policy, the Financial Times reports.

Nigeria secured a US$250mn loan from the AfDB to finance the delivery of healthcare and disaster relief services in the country.

Lagos Stage Government has kicked off the bookbuilding process for a bond reported to be in range of around NGN60bn (US$190mn). Chapel Hill Advisory Partners is the mandate lead arranger on the deal, with Futureview Financial Services,  Radix Capital Partners,  SFS Financial Services, Stanbic, Capital Limited, United Capital, Union Capital Markets, Vetiva Capital Management, and Zenith Capital coming in as bookrunnners.

 

AMERICAS

Petrobras' divestment efforts continue apace. The Brazilian state-owned oil producer agreed to  sell its 49% stake in Nova Fronteira ethanol venture to its partners, Sao Martinho SA, for up to BRL500mn (US$150mn), according to a report from Reuters. The transaction is one of five that are not prohibited due to the oil company's ongoing investigation by a government auditing body.

Latin American currencies weakened slightly on Wednesday after the Federal Reserve hiked US interest rates for the first time this year, increasing the key benchmark rate by 25bp, and signalled a faster pace of increases in 2017. The Mexican peso lost 1% in early trading, while the Brazilian real dropped 1.12% and the Chilean peso lost 0.72%, according to data from Reuters.

Argentina's Pampa Energía is on the hunt for at least US$50mn to help finance the development of the El Corte wind project.

Mexico City has closed a US$50mn municipal green bond, the first in Latin America. The 5-year issuance was oversubscribed by 2.5x, and the proceeds of which will be used to finance climate-resilient infrastructure and transport projects in Mexico City. The move comes just over two months after the Mexico City International Airport (NAICM) issued US$2bn in green bonds, the country's largest to date.

 

RUSSIA, CIS & EUROPE

Uranium One, which is owned by Rosatom, repaid US$210mn of Eurobonds, the company disclosed this week. The company set the redemption price at 103.125%. Uranium One funded the transaction with its parent company’s loan worth US$165mn. The outstanding amount of Eurobonds was at US$209.9mn.

ALROSA continued to deleverage this week, repaying a US$370mn loan provided to the company by UniCredit in 2014. According to the company’s press release, total debt decreased to US$2.3bn.

Georgia's Central Bank left its benchmark refinancing rate at 6.50%, saying inflation is expected to rise from a planned one-time rise in excise taxes, but demand remains weak and should restrain inflation in the medium term. The National Bank of Georgia (NBG) has cut its rate four times this year by a total of 150bp and said in October that it expected to cut the rate to 6.0% over the next two quarters.

ASIA

The Indian rupee headed for its biggest loss in a month on concern outflows from Indian assets will accelerate after the Federal Reserve hiked interest rates and forecast further tightening in 2017. India’s currency fell 0.6% after the announcement - the biggest drop in a month - to 67.82 per dollar. The yield on sovereign bonds due September 2026 jumped five basis points to 6.45%, ending a two-day gain for the securities.

The Hong Kong interbank borrowing rate for offshore renminbi overnight loans (CNH Hibor) rose another 4.4% to 11.8% today, taking the overnight rate to its highest level since last Monday’s 12.4%. Following Wednesday’s Fed rate hike China’s onshore exchange rate stood at Rmb6.9318, or 0.1% stronger than the onshore rate.

Vietnam-based food producer Masan Group prepares to issue non-convertible international bonds worth up to US$300mn, the firm said in a statement to the Ho Chi Minh Stock Exchange. Credit Suisse (Singapore) Ltd and the Singapore branch of Deutsche Bank AG were advising Masan Group and the 5-year and 10-year bonds would be listed on the Singapore Stock Exchange, the statement said.

Malayan Banking Bhd (Maybank) has set up a sukuk programme that will see the bank invest up to RM10bn (US$2.2bn) into ringgit and foreign currency-denominated senior and subordinated sharia-compliant instruments.  

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