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The Daily Roundup

Egypt begins roadshow for new triple-tranche benchmark bond – Turkey’s Central Bank defies expectations by keeping main policy rate steady despite lira’s drop – Mozambique’s credit rating downgraded by S&P to “SD” – Chile’s peso-denominated bonds to become “Euroclearable” in February – Russia’s Transneft looking to tap the market with RUR15bn exchange bond - AIIB and World Bank co-financed hydropower work in Pakistan with US$720mn loan

Jan 24, 2017 // 5:47PM

MIDDLE EAST & TURKEY

Abu Dhabi is said to be looking to arrange fixed income investor meetings in Asia next week, Reuters reports. It is unclear whether the meeting will materialise a new bond. The Emirate last tapped the market in April 2016 when it raised US$5bn on international markets.

Egypt has started marketing a triple-tranche US dollar benchmark bond this week. IPTs for the 5-year tranche are 6.375-6.625%; 10-year tranche, 7.625-7.875%; and 30-year tranche, 8.625-8.875%. The deal is being managed by BNP Paribas, Citigroup, JP Morgan and Natixis.

Turkey's Central Bank hiked its overnight lending rate 75bp to 9.25% on Tuesday, but left its main policy rate on hold, surprising investors who looked to the CB to stem the currency’s slide. Bulent Gedikli, an adviser to the Turkish President, took to Twitter to protest the broad obsession with the country’s currency, saying that there needs to be greater focus on the structural reforms, and that “only so much can be done by limiting the lira.”

Interest rates in Oman are on the rise, reflecting tightening liquidity in an environment of heightened borrowing, according to data from Reuters and the Central Bank of Oman. The weighted average interest rate of deposits in Omani rial increased from 0.904% to 1.443% in November 2015 and November 2016, respectively. During the same period, the weighted average of the lending rate grew from 4.763% to 5.081%.

AFRICA

The Nigerian Minister for Budget and National Planning, Udoma Udoma, announced a raft of new measures aimed at bringing the oil-dependent African country out of recession. The new Economic Recovery and Growth Plan (ERGP), aims to restore growth over the next three years through expansion of the country’s infrastructure programme, asset divestment, and economic diversification. Other measures included in the medium-term plan are: expansion of social investment programmes; improving the ease of doing business in the country; accelerated implementation of National Industrial Revolution Plan; exports promotion; agricultural transformation; and enhancing growth by improving skills.

Dollar liquidity slowly returns to Nigeria. The country’s foreign exchange reserves rose 8.9% to US$27.49bn by January 20 from a month ago and climbed to the highest level since April, the Central Bank of Nigeria said this week. However, FX reserves are down 3.17% from the same period in January 2016.

In an anticipated move, S&P Global Ratings downgraded the Foreign Currency LT credit rating of Mozambique to ‘SD’, selective default, off the back of its failure to pay over US$58mn in coupons in its 2023s.

Angolan banks requested a bailout package from the country’s government this week. The country’s banks are adversely impacted by low price of oil, which contributes a majority of the nation’s foreign–exchange earnings.

Africa's third-biggest oil producer Equatorial Guinea has presented an offer to join the Organisation of the Petroleum Exporting Countries (OPEC) this year and has agreed to production cuts, its energy ministry said on Monday. If Equatorial Guinea was to join OPEC, it would become the cartel's 14th member and the sixth from Africa, further raising the continent's influence and profile in the corridors of global oil production and pricing.

AMERICAS

Grupo Promerica, which owns a number of banks throughout Central and South America, has secured a US$92.5mn loan from the IFC. The loans will be used by four of the Group’s subsidiaries – Banco de la Produccion S.A. in Nicaragua, Banco Promerica S.A in Costa Rica, Banco Promerica S.A. in El Salvador and Banco Promerica S.A. Guatemala – to help finance renewable energy and energy efficiency projects in their respective jurisdictions.

Chile’s peso-denominated bonds will be "Euroclearable" from the start of February, officials from the country’s Ministry of Finance revealed this week. The move will make it much easier for international investors to participate with Chile’s local currency bond market.

Colombian glass company Tecnoglass priced a US$210mn 5NC3 trade at 98.798 with a 8.2% coupon and a yield of 8.5%. The deal was below an expected size of US$225mn.

US President Donald Trump plans to meet with Mexican President Pena Nieto to discuss a wide range of issues before the end of the month, though the two are expected to focus predominately on NAFTA and immigration – areas the two leaders have shown some divergence to say the least.

The Brazilian government has remained firm in its commitment to passing key pension reforms during the first half of this year without watering down the legislation, despite the threat of protests. The reforms currently command about 80% support from both houses of the Brazilian Congress.

Peru’s government will value the partially built Gasoducto Sur Peruano (GSP) natural gas pipeline and schedule a new auction for a construction and concession contract “as soon as possible,” the country’s Energy and Mines Minister said this week, after Odebrecht and the concessionaires – which also include Spanish grid operator Enagas and Peruvian engineering and construction firm Grana y Montero (GyM) – failed to meet a key financing deadline. Odebrecht, which had been looking to exit the pipeline since April 2016, and it was revealed las November that corruption-ensnared Odebrecht may have had to leave the US$5bn project as a precondition for a number of banks to provide a US$4.1bn syndicated loan to help finance the project.

ASIA

China's Central Bank this week said it lent CNY245.5bn (approx. US$35.83bn) to 22 financial institutions via its medium-term lending facility (MLF), which it uses to manage short and medium-term liquidity, and raised interest rates for the loans from 2.85% to 2.95% for 6-month loans and from 3.0% to 3.1% for 1-year loans.

China’s President Xi Jinping said that the country would continue targeting structural reforms and suggested that supply-side reforms would be the primary area of focus for the government in the coming weeks. He also said the country’s markets would need to reduce ineffective supply, which means cutting excess productive capacity out of the economy as well as deleveraging.

China’s Hunan Tv & Broadcast Intermediary Co Ltd is looking to raise up to CHY2bn (US$291.6mn) in debt, according to Reuters.

The Asian Infrastructure Investment Bank (AIIB) and World Bank have co-financed hydropower work in Pakistan to the tune of US$720mn. The World Bank will lend US$390mn and the AIIB US$300mn. The money will be used to fund an extension to the Tarbela-Fifth hydropower plant, which will add 1,410MW to Pakistan’s electricity grid.

Taiwanese packaging material supplier Chang Wah Electromaterials (CWE) secured NT$6.85bn (approx. US$217.25mn) from a syndicate of regional lenders. Some of the proceeds will be used to retire existing debt.

The Central Bank of India announced this week that it will execute an early buy-back about Rs500 crore in perpetual bonds in a bid to inject more liquidity into the system.

RUSSIA, CIS & EUROPE

Igor Dmitriev, a Russian Central Bank official, told press the Bank could ease monetary policy further if an economic recovery and low inflation persist. It last trimmed rates by 50bp in September last year. Central Bank officials next meet on February 3.

Gazprom, the world’s largest natural gas producer, is considering asset sales, dividend and wage freezes as it looks to raise fresh funds. The gas giant hopes to gain up to RUB350bn (approx. US$6bn) from asset sales, and could extend borrowing by up to RUB290bn over the next two years.

Russian Deputy Minister Sergei Storchak told reporters Tuesday that the government has not ruled out inviting foreign banks to sell Russia’s sovereign Eurobonds. He said any firm decision on how the government will move forward with an anticipated US$3bn in borrowing from the international capital markets this year will likely depend on the next steps of the US administration.

Russian oil pipeline monopoly Transneft plans to offer 7-year exchange bonds totalling RUR15bn on Thursday, with Gazprombank acting as organizer for the placement, PRIME agency reported on Monday, quoting sources. The first coupon guidance was set at 9.2–9.4% annually, which corresponds to a 9.41–9.62% yield to maturity.

The British Pound slid by 1% to 1.2435 on Tuesday after the UK Supreme Court ruled the government would need to secure Parliament consent to trigger Article 50 and commence negotiations on a deal to exit the European Union. The news comes as Philipp Hildebrand, Vice Chairman of BlackRock, the world’s largest asset manager, told press that the clearing euro-denominated financial contracts will have to leave London and stay inside the European Union when Britain leaves the bloc's single market, adding further downward pressure to the currency.

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