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The Daily Roundup

Qatar releases budget forecast – Rönesans to finalise US$1.5bn loan with Japanese lenders – ADB issues fifth green bond – Brazil waters down austerity measures – Alfa Bank to re-tap US$400mn 2022s – Fantasia Holdings Group re-taps 2021s – EM credit trade volumes rise to record highs

Dec 21, 2016 // 4:34PM

MIDDLE EAST & TURKEY

Qatar's budget deficit is forecast to reach US$7.8bn (QAR28.3bn) in 2017, with revenues and expenditure estimated at US$46.72bn (QAR170.1bn) and US$54.49bn (QAR198.4bn), respectively. The government said it expects to continue borrowing from international capital markets next year as it looks to relieve pressure on the banking sector.

Turkish construction firm Rönesans Holding said it will complete a yen-denominated loan deal worth US$1.5bn, provided by Japanese banks JBIC, Nexi, SMBC and BTMU, to fund the construction of its Istanbul İkitelli city hospital project in March next year.

Kuwait's Warba Bank has reportedly mandated nine banks to arrange its U$250mn Tier 1 capital boosting sukuk, Reuters reports.  Abu Dhabi Islamic Bank, Ajman Bank, Bank ABC, Emirates NBD, KAMCO Investment Company, Kuwait Finance House, Noor Bank, Standard Chartered, and Warba Bank's asset management arm are working on the deal.

Oman's Electricity Holding Company raised US$325mn in fresh funding through a 1-year loan (with an optional 1-year extension) provided by Bahrain's Bank ABC, Gulf International Bank, National Bank of Abu Dhabi and Standard Chartered, the company's chief exec said this week. The loan caps off a busy year for Omani issuers; Dhofar Power Company, Muscat Electricity Company, Majan Electricity Company, Mazoon Electricity Company, Petroleum Development of Oman (PDO), and the Ministry of Finance have all tapped global credit markets this year.

World Bank's board of executive directors approved a second US$1bn disbursement from a US$3bn loan to Egypt to support its economic reform programme. Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy hit by political upheaval since a 2011 revolt and to ease a dollar shortage that has crippled imports and hampered its recovery.

AFRICA

The African Development Bank issued its fifth green bond this week, an SEK1.25bn (US$134mn) 5.5-year note, and the first time the bank executed an SEK-denominated trade since 2014.

AMERICAS

Brazil's Congress watered down many of the fiscal austerity commitments that cash-strapped states had agreed to in exchange for debt relief, further damaging government efforts to enforce fiscal discipline at the state level. The lower house passed a bill that allows states in the worst financial conditions to halt or restructure debt payments, but removed measures imposed by President Michel Temer to force states to increase pension charges on employees and forbid local governments from raising wages and creating new jobs.

Emerging market debt trading volumes rose 21% in the third quarter from the same period last year and increased 2% from the second quarter, according to a survey released this week by the EMTA. Volume was US$1.137tn in Q3 2015, US$1.357tn Q2 2016, and US$1.379tn in Q3 2016.

RUSSIA, CIS & EUROPE

Russia’s Alfa Bank has re-tapped its timeless US$400mn Eurobond with further US$300mn note, first coupon set at 8%. The bank itself was acting as organizer, along with UBS.

Russia's Central Bank said this week that a banker at Deutsche Bank's Russian branch had manipulated markets by conducting RUB300bn (US$4.87bn) in stock trades to directly profit members of his family.

Bashneft, recently purchased by Rosneft, has opened the books for its 7-year RUB10bn bond, as part of its RUB50bn issuance program. Earlier today the Russian press also reported that Bashneft has agreed to loan RUB82.5bn to its parent company.

Russian oil company Rosneft has set the final guidance for the first coupon of 30bn rouble 10-year exchange bonds at 9.35–9.4% annually, Russian media reported on Tuesday. The guidance corresponds to a yield of 9.57–9.62% to a 5-year buyback offer, with placement of the bonds is preliminarily scheduled for Friday and Gazprombank acting as the chief organizer.

Ukraine's parliament approved a budget for 2017 on Wednesday, raising its chance of securing more aid from the International Monetary Fund under a US$17.5bn loan package. It kept the budget deficit at 3% of GDP in line with the IMF programme's requirements.

The Polish zloty strengthened 0.1% to 4.41 against the euro on Wednesday, with 10-year sovereign bond yields dropping 1-2bp and trading at 3.43%. Central Europe's healthy long-term economic growth prospects have been supporting assets in the region as the end of the year approaches, but domestic political issues have weighed on sentiment, particularly in Poland, where the Prime Minister finally gave in to opposition demand for a news conference.

Hungary’s Central Bank held its benchmark interest rate at a historic low as it looks to make continued progress on stoking higher levels of inflation. The Hungarian National Bank left its three-month deposit rate at 0.9%, where it has remained since May.

ASIA

China's Fantasia Holdings Group is looking to raise just over US$100mn in a re-tap of existing notes 2021s, according to Reuters.

The credit rating of Al Bayan Holding Company's MYR1bn sukuk was downgraded by RAM Ratings from 'C1(s)' to 'D' for its failure to redeem MYR100mn due 16 December. Under RAM’s rating definitions, a Sukuk rated 'D' is either currently in default or faces imminent default on its financial obligations

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