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The Daily Roundup

Israel sells record Eurobond – Saudi Arabia cuts oil output more than expected – Erdogan clinches constitutional reform victory – SARB to weigh in on Absa bailout controversy – LatAm pipeline swells to new heights – VEB plans fresh bond placement – India’s NTPC mulls fresh Eurobonds

Jan 13, 2017 // 6:31PM

MIDDLE EAST & TURKEY

Saudi Arabia has cut oil output to its lowest in almost two years, the country's Minister of Energy Khalid al-Falih said, with production falling below 10 million barrels per day. The cuts are greater than the 486,000 bpd it had agreed to in a far-reaching deal agreed to in a wide-reaching deal with OPEC and non-OPEC oil producers.

Israel sold €2.75bn in 10 and 20-year Eurobonds, the country's largest euro-denominated bond sale to date and the cheapest financing it has received in over a decade. The sale, which generated €9.8bn in orders from investors, included a €1.5bn 10-year tranche at 1.5% and a €750mn 20-year tranche at 2.375%, according to data from Bloomberg.

Turkish lawmakers approved a controversial constitutional amendment allowing the president to be a member of a political party and issue decrees. The move further consolidates power with President Erdogan, who said the move would help overcome 'fractious' coalitions of the past. Parliament also approved an amendment to existing immigration laws, granting citizenship eligibility to people investing between US$1bn and US$3bn in the local economy through various assets and instrument.

In an interview with Anadolu news agency, the Turkish Economy Minister Nihat Zeybekci aimed to reassure markets that the country's Central Bank has a number of tools at its disposal to counteract any "speculative" moves after the lira continued its slide this week. The currency has lost nearly 10% against the US dollar in the first two weeks of the year.

 

AFRICA

South Africa's Central Bank is to weigh in on the anti-corruption agency's investigation into allegations Absa Capital, a unit of Barclays Africa Group, benefited from an Apartheid-era bailout from the Reserve Bank of South Africa.

The Nigerian Government is to finalise a US$1bn Eurobond sale by the end of January, sources suggest, as the government continues to explore other avenues of raising new financing to plug its yawning budget deficit.  Citigroup, Standard Chartered Bank and Stanbic IBTC Bank are managing the trade.

In a new circular, Nigeria's Debt Management Office (DMO) said it plans to auction NGN130bn worth of five, 10 and 20-year notes bonds on January 18.

 

AMERICAS

The Republic of Chile will re-tap a peso-denominated 144A/Reg S bonds due 2021 which it expects to price next week. The local-currency bond will be marketed to both local and foreign investors. BNP Paribas, Citigroup, Goldman Sachs and JP Morgan are managing the trade.

Aeropuertos Dominicanos Siglo XXI (Aerodom) priced an upsized US$317mn 2029 bond this week at 6.75%, down slightly from initial guidance. JP Morgan and Scotiabank managed the trade.

The Republic of Honduras priced a US$700mn 2027 bond at par to yield 6.25%, slightly tighter than IPTs, with a book nearing the US$6bn mark.

Argentina power company Genneia priced an upsized US$350mn 5NC3 bond at par to yield 8.75%, the proceeds of which will be used to repay existing maturities. The book grew to just over US$1bn. Bank of America Merrill Lynch, Itau and JP Morgan were leads on the trade.

Brazilian biofuels producer Raizen priced a US$500mn no-grow 10-year unsecured bond at par to yield 5.3%. The deal, which was managed by Bank of America Merrill Lynch, Bradesco BBI, Citi, JP Morgan, and Santander, saw over US$3bn in orders from investors.

The Republic of Argentina secured US$6bn in unsecured 18-month loans from a group of six international lenders including BBVA Frances, Citibank, Deutsche Bank, HSBC, JP Morgan, and Santander. Under the deal, Argentina will borrow US$1bn from each of the banks at LIBOR+290bp. The move comes as Argentina continues a record borrowing spree and looks to borrow up to US$7bn from international capital markets, in a deal arranged by the same group of lenders extending the loans.

Brazilian cement company Votorantim Cimentos issued BRL500mn in local market debentures paying 119.9% of the local interbank rate (CDI). The sale was coordinated by Bradesco BBI.

Mexico's peso strengthened on Friday, rebounding from a fresh historic low hit in the previous session after President-elect Donald Trump warned U.S. auto companies would face a high tax for products made south of the border. The peso closed at 21.8 per dollar, up 0.27% on Wednesday.

Paraguay is considering raising up to US$550mn in the debt market in March, Reuters quoted Finance Minister Santiago Pena saying.

Inversiones Atlantida, the largest financial group in Honduras, has finished roadshows to market a potential debut US dollar bond through Oppenheimer. Expected ratings are B/B by S&P and Fitch.

PDVSA, Venezuelan state energy company forecasts domestics oil production will remain near 23-year lows in 2017. An internal report obtained by Reuters also mentions a significant decrease of exports to India, one of the company most important clients. Unlike China, PDVSA’s other big customer; India pays mostly in cash, so a reduction in exports would likely worsen Venezuela's financial asphyxiation.

 

RUSSIA, CIS & EUROPE

Russia's LSR Group secured a RUB2bn 3-year loan from Bank Saint Petersburg this week for general corporate purposes.

Russia’s Vnesheconombank (VEB) plans issue RUB10bn 5-year 9.76% bonds on January 12, according to the bank’s statement. The bonds carry semi-annual coupons, with total coupon payment at RUB481.3mn per coupon period.

Russia’s Central Bank expects seasonally adjusted inflation at 0.3% in January compared with December, 2016, Igor Dmitriev, the head of the bank's monetary policy department, told reporters in Moscow on Friday. Meanwhile, First Deputy Governor of the Bank of Russia Ksenia Yudaeva indicated that the bank “does not exclude” the possibility of seeing inflation drop below the 4% target in 2017.

Russia continues talks with China over yuan-denominated OFZ treasury bond, Russia's Central Bank deputy chairman Sergei Shvetsov said Friday. The talks related to the possible issuance of treasury bonds denominated in the Chinese currency started in 2016.

 

ASIA

India's largest utility NTPC is to issue a benchmark-sized euro-denominated bond this month, sources suggest. The move will be part of the company's bid to borrow up to US$4bn from global markets this year as it looks to ramp up capital expenditure. Axis Bank, , Bank of Tokyo Mitsubishi UFJ, Barclays, Citigroup, and Standard Chartered are organising the sale.

Adani Ports launched a US$500mn 5-year bond this week, the company said in a statement. The first private sector Eurobond in India this year, the notes were priced at par and carry a fixed coupon of 3.95%.

Malaysia’s Central Bank will consider introducing more measures to stabilize the ringgit if needed as previous steps to reduce speculation of the currency show progress, Governor Muhammad Ibrahim said. Bank Negara Malaysia could look at ways to improve liquidity if necessary, Muhammad told reporters in Kuala Lumpur on Friday.

South Korea issued a US$1bn currency equalisation bond at UST+55bp, and the country's first international debt sale since S&P upgraded the country’s sovereign credit rating by one notch from 'AA-' to 'AA' in August last year. 

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