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The Daily Roundup

Egypt prices landmark US$4bn bond – ICD close to pricing sukuk – Namibia concerned over local bond demand – SARB keeps rates unchanged – Odebrecht mulls IPO for construction arm – Mexico inflation rises – Chile to sell $9bn in local bonds – Gazprom could issue Eurobonds in March

Jan 25, 2017 // 6:39PM

MIDDLE EAST & TURKEY

Egypt raised US$4bn from the international capital markets through the landmark sale of triple-tranche bonds. The sovereign sold US$1.75bn in 5-year bonds with a 6.125% coupon, US$1bn in 10-year bonds paying 7.5%, and US$1.25bn in 30-year notes paying 8.5%. BNP Paribas, Citigroup, JP Morgan, and Natixis led the sale.

Egypt's Corplease Financial Leasing has issued a multi-tranche EGP1.148bn (approx US$61mn) bond with maturities ranging between one and seven years. The deal was arranged by Banque Misr, Commercial International Bank (CIB), and National Bank of Egypt (NBE).

The Investment Corporation of Dubai is close to pricing a benchmark-sized dollar bond this week. The company, which has stakes in Emirates Airline and Emirates NBD, will look to price a US$500mn trade as early as Thursday, sources close to the deal revealed.

 

AFRICA

Namibia's Deputy Permanent Secretary of Finance, Titus Ndove, told local press that rising commodity prices coupled with a broad lift-off in interest rates have started to weigh on demand for government paper, and could impact the country's borrowing plans. The government plans to release its borrowing plans for the 2017/2018 fiscal year in February, when it tables the new budget.

South Africa’s Reserve Bank kept its main repo rate unchanged this week at 7%, citing an increase in global interest rate uncertainty and slow economic growth. The rand was once of the worst performers of 2016, with the economy narrowly evading a credit downgrade to junk status.

Gambia's Central Bank deposits are intact, a spokesman for President Adama Barrow said this week, shortly after the new leader had said it appeared his exiled predecessor, Yahya Jammeh, looted state resources to the tune of US$11.5mn (1.2% of GDP) after his election defeat.

Nigeria's Speaker of the House of Representatives, Yakubu Dogara, has proposed issuing an infrastructure bond to help fund the development of new road infrastructure in the country. Nigeria has struggled to secure funding from multilaterals and commercial lenders in recent months over concerns about the country's ability to implement key structural reforms, though it has enjoyed some success in the local capital markets, most recently raising US$074mn.

African Finance Corporation (AFC) issued a US$150mn sukuk, the first one of the year. This is the highest rated Sukuk ever issued by an African financial institution and received offers for over US$230mn.

Interest rate repayments and fees on Kenya's US$750mn syndicated loan arranged in 2015 have spiked to KES12bn or 8%. The loan was originally anticipated to come with 5.7% all-in rate, according to local press reports. The news has some observers wondering whether some clauses typically activated in the event of financial distress have kicked in.

 

AMERICAS

Aeropuertos Argentina 2000 (AA2000) plans to finalise allocations on its US$400mn 10-year bond issuance on January 30, the company said in a filing to local regulators.

Inflation in Mexico increased 4.78% year on year in the first two weeks of January, substantially higher than initial estimates.; Banxico is targeting the 3% range. The news comes as the country's Central Bank chief Agustin Carstens voiced further concerns about the impact of US policy on Mexican supply chains.

Odebrecht appears to be mulling an IPO for its construction arm in a bid to help the company insulate itself from the scandals currently rocking the Brazilian firm, according to reports in local business newspaper Valor.

Brazil's state-owned oil producer Petrobras will extend its bond buyback by an extra US$2bn, it said this week. The company originally targeted a bond buyback of roughly US$4bn, funded by its recent issuance of 5 and 10-year notes yielding 6.125% and 7.375% respectively.

Brazil's Prosecutor-General for Labour Ronaldo Fleury said President Michel Temer's proposals to modernize the country's labour laws are illegal in a report published this week, in a blow to the President's ambitious plans to cut back on government spending.

Paraguay's Central Bank maintained its monetary policy rate at 5.50% for the seventh consecutive month, saying the risk to domestic inflation from abroad had eased temporarily in light of the recent depreciation of the U.S. dollar at the global level. The Central Bank of Paraguay (BCP) changed its rate three times in 2016 for a net reduction of 25bp following a rate hike in January and then two cuts in May and July.

Chile's Finance Ministry said on Wednesday it will issue peso and inflation-indexed bonds in the local market in 2017 for the equivalent of up to US$9bn, as per the government's annual budget plan. "Continuing with the plan of strengthening the liquidity and depth of the local fixed-income market, we will continue to promote existing benchmarks for the nominal and UF (inflation-indexed) curves," the ministry said, quoted by Reuters.

 

ASIA

Bloomberg said it would create a parallel Bloomberg Barclays global aggregate index that includes Chinese onshore bonds and some of the country's bank debt. The move is expected to give global asset managers more exposure to the country's interbank bond market, which the government last year sought to open to foreign investors.

China Nonferrous Metals Industry Association is reportedly in talks with Chinese authorities over a plan to halt aluminium refinery works over the winter period in a bid to reduce air pollution. If approved, the draft measure could become reality as early as next winter, leading to a big contraction in supply.

China's banking regulator, the China Banking Regulatory Commission, issued guidelines to strengthen risk controls by financial institutions undertaking outbound investment this week, including the management of anti-money laundering and anti-terrorist financing measures.

Indian business tycoon Vijay Mallya and nine others connected to him and Kingfisher Airline were charged with fraud this week in connection with a defaulted Rs9bn loan granted by a state-owned bank, the government said. Mallya, among others, is being accused of diverting approximately Rs2.45bn originally intended for the now-defunct airline.

 

RUSSIA, CIS & EUROPE

Gazprom plans to issue Eurobonds in US dollars and British pounds in March this year, according to state-owned Russian news agency TASS. The company could issue up to the equivalent of €1bn. The news comes the same week it was revealed the gas giant could link up with the Trans Adriatic Pipeline, a move that would bolster its supply channels into Europe.

Qatar’s Sovereign Welfare Fund is planning to spend a further US$2bn in Russia following a recent acquisition of a 17.5% stake in Russia’s state oil giant Rosneft. Vladimir Putin, Russia’s president, said on Wednesday that the Qatar Investment Authority would participate in new oil extraction projects in the country, without elaborating further. Abullah bin Mohammed Al Thani, the fund’s chief executive, said it would invest a further US$2bn on top of US$500mn of existing investments in the country.

Russian banks turned a profit of RUB930bn (approx US$15.66bn) in 2016, compared with RUB192bnin 2015, according to newly released Central Bank data, signalling a continued rebound in the country's economy.

Georgia's Central Bank raised its benchmark refinancing rate by 25bp to 6.75%, adding that it considers it necessary to gradually raise the rate to 7.0% over the next two quarters to curb inflationary expectations stemming from a temporary increase in inflation. Last year the NBG cut its rate four times by a total of 150bp.

Ukrainian agribusiness giant Kernel Holding raised US$500mn on the international capital markets through the sale of 5-year bonds paying a coupon of 8.75% - down over 50bp from IPTs. The notes were priced at 99.504%. ING Wholesale Banking and JP Morgan managed the trade.

Poland's currency and stocks outperformed regional assets on Wednesday morning as the Central Bank said it could keep policy loose for as long as two years if needed to boost growth. The zloty added 0.2% to its value and Warsaw stocks were 1.1% higher.

The National Bank of Hungary has left its 3-month deposit rate at record lows of 0.9%. Continuing with its easing programme, the Central Bank opted to set a cap on 3-month deposits to HUF750bn for the first quarter, down from HUF900bn in the fourth quarter.

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April / June 2020

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