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The Daily Roundup

EQUATE sets up US$2bn sukuk programme – Eni Ghana scores funding for new gas project – Congo launches CFA150mn bond – Brazil to push through pension reform – Aeropuerto Argentina 2000 to issue US$400mn – Russian bonds, equities proving attractive – KfW puts €1bn into India’s green energy transmission system

Dec 16, 2016 // 5:44PM

MIDDLE EAST & TURKEY

EQUATE Petrochemical Co. has set up a US$2bn sukuk programme just two months after its inaugural issuance in October. The Kuwaiti petrochemicals giant set up a special purpose vehicle, EQUATE Sukuk SPC, and could hit the market as early as Q1 next year as it looks to continue refinancing a US$6bn dual conventional and Islamic facility secured in June 2016.

The United Arab Emirates Central Bank said it was raising interest rates on its certificates of deposit, its main policy instrument, by 25bp, shortly after the US hiked its benchmark lending rate by the same amount.

AFRICA

The International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) have granted US$517mn in debt and guarantee to fund the development of the US$7.7bn Sankofa Gas Project in Ghana. Scheduled to commence production in 2018, the project is being developed by consortium of Eni Ghana with 44.44% stake, Vitol Ghana 35.56% and Ghana National Petroleum Corporation 20%.

The Congo Republic launched a 5-year CFA150bn (US$250mn) bond at 6.5% this week, the proceeds of which will be used to fund new infrastructure projects in the country.

The African Development Bank Group (AfDB) has approved US$71.8mn loan for the construction of a 70km road section connecting Northern Mozambique and Tanzania.

 

AMERICAS

Peru's Central Bank left its monetary policy interest rate at 4.25% as inflation is still seen approaching its 2% target by the end of 2017, and revised upwards its estimate for 2016 economic growth to 3.9% from November's estimate of 3.8%.

The Brazilian Congress Constitution and Justice Commission voted in favour of the pension reform implementation this week. Legislation will be debated by the Committee, which is composed of Congress members, on an accelerated timeline. President Temer is keen on pushing the reforms through as quickly as possible.

The Brazilian Central Bank announced its October’s IBC-Br Index, a proxy for GDP, which slid 0.48% month on month and 5.28% year on year - much lower than initially expected by the market. It indicates that the country’s economic rebound is not materializing.

Brazil's former President Luiz Inacio Lula da Silva is facing another set of criminal charges linked to Brazil's Petrobras oil company, prosecutors say. In the latest charge, he is accused of taking bribes from a construction giant, Odebrecht, to help win it eight Petrobras contracts. Lula is facing two other sets of corruption charges, with a ruling in one of them expected early next year.

Brazilian President Michel Temer unveiled a slew of stimulus measures to reduce the debt burden of businesses and consumers, and help pull the economy out of recession. The move will see the government write-off some of the taxes owed by companies that report losses, force banks to reduce the time it takes to process payments, and provide long-term credit for real estate transactions. The government hopes the measures will reduce the cost of doing business in Brazil

Aeropuerto Argentina 2000 will issue up to US$400mn in 10-year a cross-border trade managed by Oppenheimer and Morgan Stanley. The proceeds will be used to repay a US$175mn balance on its US$300mn notes due 2020, US$28mn in Class A notes, and US$3mn in Class C notes, as well as finance new infrastructure investments.

Peru has secured a US$80mn loan from the Inter-American Development Bank to support the development of the Huánuco - La Unión - Huallanca road network, a 150km road linking the Lima – Pucallpa corridor with that of Pativilca - Carhuaz, one of the main access routes to the Panamerican Highway.

Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer Default Rating (IDR) of Chilean government-owned oil producer Empresa Nacional de Petroleo (ENAP) at 'A'/Negative Outlook. The move comes after the rating agency revised the outlook on many of the country's banks from 'Stable' to 'Negative', citing deteriorating growth and asset quality.

The Mexican Central Bank, Banxico, hiked its benchmark lending rate by 50bp to 5.75%, up from 5.25%. The hike was double the size of what analysts had expected; most anticipated a 25bp rise.

 

RUSSIA, CIS & EUROPE

Russia's Central Bank left its key policy rate at 10% said it "will consider an opportunity of cutting the key rate in the first half of 2017" as the trend towards a sustainable decline in consumer prices takes root.

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin ordered their officials to start detailed negotiations to resolve a decades-old dispute on the Kuril Islands, north of Japan.

A deal that saw some of the world's largest producers agree to oil output cuts has prompted huge inflows into Russian equities and bonds over the past week. Russian stocks and funds recorded inflows of US$451m in the week to December 14, the biggest haul since the first quarter of 2011 according to EPFR.

Bank Assets Management Company (DUTB) took out a 'long-term' €150mn loan from Erste Group Bank AG Vienna, and a €355mn syndicated loan from Nova Ljubljanska banka, Banka Koper, NKBM d.d., Unicredit Banka Slovenije and Abanka this week. DUTB raised the money to pay back €503.2mn in bonds due 2017.

 

ASIA

S&P has lowered its credit rating on Yingde Gases Group Co. Ltd. from 'BB' to 'B-'. It also lowered the issue rating on the outstanding senior unsecured notes from 'BB-' to 'CCC+' and placed all the ratings on negative watch.

Germany's KfW is to provide a soft loan of €1bn to India's State Transmission Utilities (STU) and Power Grid Corporation of India Ltd (PGCIL) for the development of a 'Green Energy Corridor', an inter and intra-state transmission system that will carry clean energy generated by 8 solar parks throughout India.

Yields on India's benchmark government bonds shot up 12bp following the interest rate hike in the US. The hike triggered fresh outflows out of Indian fixed income securities. Foreign investors sold over Rs17,000 crore of local currency bonds in December so far, up slightly from the previous month.

Fortescue Metals Group, one of the world's largest iron ore producers, will reportedly seek to use improved profits from iron ore’s surge to deleverage to the tune of US$3bn by July 2017, prompting suggestions the company could call its 2022 Eurobonds early.

Bangladesh is planning to issue its inaugural green bond next year in a bid to fund environmentally friendly projects there, according to the country’s Sustainable & Renewable Energy Development Authority. 

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