MIDDLE EAST & TURKEY
The Turkish lira slumped to new lows Tuesday as it passed the TRY4.0 to the Euro for the first time as security risks and a slowing economy continue to weigh on investor sentiment. In a statement to members of the press, Deputy Prime Minister Nurettin Canikli said the country's economy was under attack and being singled out by a number of international credit rating agencies.
Egypt is to begin roadshowing a long-anticipated multibillion dollar Eurobond next week, the country's Finance Minister Amr El Garhy has announced. A high-profile deal in the region, the move comes after years of attempts to pass key structural reforms and secure an IMF funding package, all seen as critical for setting the troubled economy on the right path. The news comes the same week the country's Ministry of Finance issued US$$888mn in 1-year T-bills.
Egypt’s urban consumer prices rose the fastest in at least six years in December, fuelled by a 28.3% increase in food costs after the Central Bank decided to abandon currency controls two months ago. Annual urban inflation accelerated to 23.3% in December, with the monthly rate reaching 3.1%, state-run statistics agency CAPMAS reported.
Saudi Arabia's ACWA Power plans to issue up to US$1bn in bonds next month, according to the company's Chairman Mohammed Abunayyan. Citi, CCB Singapore, Jeffries, Mizuho and Standard Chartered are managing the trade.
Investment Corporation of Dubai (ICD), Dubai government's main investment arm, is looking to issue a benchmark-sized dollar bond in Q1, according to Reuters. Citi, Emirates NBD, HSBC, JP Morgan, NBAD and Standard Chartered have been appointed to manage the trade.
The International Monetary Fund has warned Tanzania that the country's economic policies threaten its growth in the next fiscal year, forecast to be around 7%. Tanzania projects growth of 7.2% for 2016, up from 7% in 2015, led by mining, telecoms, construction and financial services. But the IMF said progress has been slow and a lack of public spending is curtailing liquidity: "Monetary policy should be eased to address the tight liquidity situation and support credit to the private sector," the IMF said.
Kenyan President Uhuru Kenyatta approved a controversial law this week requiring back up plans for a forthcoming election in August if electronic voting systems fail. The move was criticised by members of the opposition party, who claimed the law makes the electoral system vulnerable to rigging. Those concerns have not seemingly passed through to investors, with government bond yields holding steady within range.
Ivory Coast President Alassane Ouattara dismissed the heads of the army, police and gendarmes on this week after a two-day military mutiny over salaries and payment delays spread unrest across the West African nation. The Prime Minister Daniel Kablan Duncan also resigned and dissolved the government, a move that had been expected after last month's elections but delayed by the uprising.
The creditworthiness of sovereigns in Sub-Saharan Africa (SSA) has an overall negative outlook for 2017 according to a report recently published by Moody's. The rating agency said liquidity stress, low growth and political risk are the main constraints and drivers of the outlook for many of the region's sovereigns this year, while average GDP growth for rated sovereigns in the region stands at 3.5%.
Brazilian state-owned oil giant Petrobras broke a long lull in the Latin American primary market after issuing US$4bn in 5 and 10-year notes yielding 6.125% and 7.375%, respectively. Proceeds from the issuance will be used for general corporate purposes and to help fund a US$2bn bond buyback.
Fitch has cut Odebrecht drilling rig notes to 'CC' from 'CCC', reflecting increased liquidity pressure on the company.
Egyptian billionaire Naguib Sawiris is reportedly looking to acquire embattle Brazilian telecoms operator Oi, potentially rescuing the firm from bankruptcy. Cerberus Capital Management LP and Elliot Management Corp are also in talks with Oi and regulators regarding a potential bid. If successful, Sawiris would like to see the Oi merged with TIM Participações, the country's second largest wireless carrier.
Brazilian port operator Libra Terminais Santos is reportedly looking to raise up to BRL125mn in fresh local market bonds, according to Reuters.
Venezuela’s Supreme Court has this week reversed parliament’s resolution aimed at ousting increasingly unpopular President Nicolas Maduro, and added that parliament refrain from passing resolutions outside its jurisdiction. The move makes any next steps to oust Maduro fairly unclear.
The Republic of Ecuador set initial price thoughts today of low to mid 9% on a tap of its 9.65% 2026 bonds. Citigroup is the sole bookrunner on the trade.
RUSSIA, CIS & EUROPE
Russia’s Reserve Fund dropped 73.3% to RUB972.1bn (US$16.2bn) in 2016 and the National Wealth Fund (NWF) fell 16.6% to RUB4.4tn (US$73.3bn) in 2016, the Russian Finance Ministry said on Tuesday. That represents a drop of 58.2% just through December 2016 for the Reserve Fund and a 5.8% fall for the NWF in the same period.
Russia has in early January cut oil output by 100,000 barrels per day (bpd) from the previous month after an agreement with OPEC to cap global crude sales, according to Reuters citing unnamed government officials. Official figures showing whether the cut was carried through will not be available for a number of months.
The Ukrainian Central Bank said it could sell as much as US$100bn in FX reserves this week. While the Bank hasn't explicitly said why, analysts suspect the move is aimed at combatting recent currency weakness.
Kazakhstan's Central Bank left its base rate steady at 12% and said it expects inflation to reach its target within the next one or two months. “The probability of further easing of monetary policy is increasing provided that the trend is confirmed by macroeconomic data,” the Bank said in a statement.
The head of China's National Development and Reform Commission (NDRC), the state planning agency, said this week that the country will not allow non-financial firms' leverage to rise beyond its current levels. Chinese non-financial corporate debt currently stands at 169% of GDP, official figures show. In a related move, the NDRC will step up efforts to encourage debt-to-equity swaps among the nation's banks.
China National Chemical Corp (ChemChina) and Swiss pesticides giant Syngenta AG have reportedly submitted a proposal to European regulators aimed at addressing their concerns related to a US$43bn merger between the two firms. The European Commission said in October that it was concerned the merger would violate anti-competition rules.