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The Daily Roundup

DIB to raise US$1bn in T1 capital – ADCB raises fresh HKD funds – Turkish immigration law reforms could boost investment – ADFD boost liquidity at Sudan CB – Tanzania scores US$305mn Word Bank loan – MXN rallies against all odds – Embraer, CBC leads LatAm bond pipeline – CAF to issue inaugural BRL bonds – Polyus Gold to begin roadshow – Russia commits to new FX strategy

Jan 26, 2017 // 6:20PM

MIDDLE EAST & TURKEY

Dubai Islamic Bank (DIB) will seek support from shareholders to raise up to US$1bn in fresh Tier 1 capital to support the bank's loan growth ambitions. DIB is targeting loan growth of between 5% and 15% for 2017. The bank is already fairly well capitalised; DIB's Tier 1 capital ratio stood at 17.8% at the end of December, well above the required threshold of 8%.

Investment Corporation of Dubai (ICD), the Dubai government's main investment arm, saw over US$1.5bn in orders on its benchmark-sized sukuk this week as the company released IPTs of MS+290bp to the market. Citi, Dubai Islamic Bank, Emirates NBD Capital, HSBC, JP Morgan, National Bank of Abu Dhabi and Standard Chartered are bookrunnners on the deal.

The Qatar Development Bank has launched a new programme aimed at supporting the country's burgeoning SME segment. Under the scheme, the bank will offer business advice alongside providing up to QAR1mn in fresh capital.

Talks between Egypt and Saudi Arabia over the second tranche of a development loan have stalled, according to reports from Reuters. In 2015 the Saudi government agreed to extend a US$1.5bn loan to Egypt through the Saudi Fund for Development for the development of the Sinai region in northern Egypt. So far, the country has received just US$300mn of the committed funding, with analysts and observers suggesting that tensions between the two countries have soured their relationship.

The Central Bank of Oman is set to issue OMR150mn in fresh 7-year bonds in mid-February, it announced. The bonds will pay a coupon of 5%. The news comes just weeks after it emerged that the Government of Oman may look to issue between US$1bn and US$2bn in bonds in the first quarter of this year.

Abu Dhabi Commercial Bank issued HKD160mn in 5-year bonds this week, priced at par with a 3.2% coupon. HSBC was the sole bookrunner on the trade. The move comes as a number of UAE and GCC-based issuers look to soak up additional liquidity in Asia.

Turkish banks should continue to support any company that shows the "slightest sign of life", Deputy Prime Minister Nurettin Canikli said, as part of a US$65bn loan guarantee programme aimed at reviving struggling firms. Canikli's comments at the Turkish Union of Chambers and Commodity Exchanges on Wednesday evening highlight the government's drive to use credit to boost the flagging economy.

A new law passed in Turkey that allows foreigners easier access to Turkish citizenship based on their investment into Turkish real estate and companies could generate over US$1bn in fresh investment, the government has said.

 

AFRICA

Sub-Saharan African investment banking fees topped US$498.8mn in the 2016, 1% higher than the value recorded during 2015 and the highest annual total since 2007, according to newly published data from Reuters and Freeman Consulting. Sub-Saharan African issuers raised a total of US$22.4bn from the debt capital markets in 2016, up 35% year on year, with South African issuers leading the pack.

The African Development Bank (AfDB) announced US$20mn in soft commodity financing for the development of Malawi, Zimbabwe and Mozambique. Proceeds from the loans will be used to purchase farm input materials and provide working capital to farmers.

Abu Dhabi Fund for Development (ADFD) deposited AED1.47bn into the Central Bank of Sudan (CBOS) to secure increased liquidity and stimulate economic growth in Sudan.

Fitch Ratings downgraded the outlook of Nigeria from 'stable' to 'negative' over concerns that the lack of US dollar reserves could hamper the economy. The country is now rated 'B+', four grades below investment grade. The West African economy is set to expand at 1.5% this year.

S&P Global has said sagging growth, exchange rate volatility, and a weakness in fundamentals poses serious risks to the South African economy in 2017. The rating agency was nevertheless optimistic about the local currency credit market, citing a strong local commercial paper and local bond market.

The International Monetary Fund (IMF) has approved a 3-year SDR 98.7mn (approx US$134.04mn) Extended Credit Facility (ECF) for Niger, which will be deployed on initiatives that boost job growth and macroeconomic stability.

Tanzania will receive a US$305mn loan from the World Bank to expand its main port in the main commercial city Dar es Salaam, where congestion and inefficiencies are hampering ambitions to transform the east African nation into a regional transport hub.

 

AMERICAS

Mexico’s currency rallied almost 2% against the US dollar on Wednesday after the Trump administration disclosed details of executive orders aimed at curbing illegal immigration and moving forward with a promised border wall. The peso was recently up by 1.9% on the buck at 21.143 pesos per dollar. According to Bloomberg, Mexico’s IPC has notched the biggest gain in dollar terms, up 7.2% since Mr Trump’s inauguration on Friday.

Brazilian aerospace company Embraer priced a US$750mn 10-year bond at par this week. The notes pay a coupon of 5.40% and were issued at a spread of UST+287.7bp. The sale generated over US$3.75bn in orders from investors, allowing the company to price with virtually no new issue premium. BB Securities, JP Morgan and Santander managed the trade.

Central America Bottling Corporation (CBC) priced a US$500mn 10NC5 bond at 99.065% to yield 5.875%. The notes carry a coupon of 5.75%.

Power generation company AES Argentina has set initial price thoughts of low to mid 8% on a US$300mn 7NC4 bond. The deal, which is expected to price today, is being managed by Credit Suisse, Itau BBA and JP Morgan.

Sigma Alimentos has hired BNP Paribas, JP Morgan, MUFG and Rabobank to help arrange investor meetings ahead of a euro-denominated 7-year bond expected to price in early February.

An official from the Brazilian Treasury said the sovereign could issue euro-denominated notes this year as it looks to bolster its borrowing programme to plug the budget deficit.

Corporación Andina de Fomento (CAF), a South American development bank, sold BRL220.2mn (US$69.4mn) in real-denominated Uridashi notes targeted at Japenese investors. This was the first time CAF issued in this currency.

 

ASIA

A severe drought in the South Indian state of Tamil Nadu is crippling its largely agriculture-based economy, and suffocating farmers' access to credit, local newspapers report. The Primary Agriculture Cooperative Credit Societies (PACCS) has said that both state-owned and private banks have severely restricted lending to farmers in the region, a problem heightened by the country's recent demonetisation – which saw upwards of 80% of India's currency removed from circulation.

India's Jain Irrigation Systems raised US$200mn by selling the company's debut green bond to offshore investors – and the first green bond to be sold in 2017. Deutsche Bank and JP Morgan were global coordinators on the 5NC3 trade, with Barclays, Nomura and Rabobank acting as joint lead managers.

India's largest state-owned utility NTPC priced a €500mn 10-year bond this week at 99.449%. The notes pay a coupon of 2.75% and attracted over €2.4bn in bids from global investors. Axis Bank, Barclays, Citigroup, Mitsubishi UFJ Financial Group, SBI Holdings, and Standard Chartered Bank were bookrunners on the trade.

Indian state-owned Allahabad Bank has raised Rs 1,000 crore in Basel III-compliant Tier 2 bonds this week. The bonds were privately placed and carry a coupon of 8.15%.

Chinese utility services provider China Water Affairs Group issued US$300mn in 5-year notes priced at 98.92% and paying a coupon of 5.25% and yielding 5.31%. Morgan Stanley was the sole bookrunner on the deal.

China's Central Bank will continue to conduct spot investigations on Bitcoin exchanges, it said on its website this week. The PBOC launched spot checks on BTCC, Huobi and OkCoin earlier this month to identify a range of possible rule violations and clamp down on activity that could apply further pressure on the yuan. The news comes the same week the Central Bank asked domestic lenders to tighten up lending throughout the first quarter of this year, capping mortgage volumes at their current levels.

Singapore’s industrial production surged the highest levels in five years in December, led by a boost in electronics exports, according to data from the Economic Development Board. Manufacturing climbed 21.3% in December from a year earlier, while output rose a seasonally adjusted 6.4% in the month.

RUSSIA, CIS & EUROPE

Russian oil company Bashneft plans to publicly offer RUB5bn 7-year exchange bonds, the company said in a statement this week. In March 2016, the company’s Board of Directors approved two exchange bond programs totalling up to RUB100bn.

Russian gold producer Polyus Gold will begin roadshowing a potential US dollar bond this week. Alfa Capital Markets, Gazprombank, JP Morgan, Renaissance Capital, Sberbank CIB and VTB Capital were mandated to manage the sale.

A joint venture between Russia's top gold producer Polyus Gold and state conglomerate Rostec has bought the rights to develop Sukhoi Log, one of the world's largest untapped gold deposits, for RUB9.4bn (US$158mn). Polyus and Rostec's joint venture - SL Zoloto - made one raised bid in the auction, where the starting price was RUB8.6bn, according to Reuters. Sukhoi Log will require up to US$5bn in investments, according to industry estimates based on a 10-year-old state feasibility study.

Russia says it will start buying up foreign currency from February in an attempt to shield the rouble from volatility. Russia’s Central Bank said it would buy foreign currency on the domestic market at a level consistent with the country’s oil and gas revenue. The Ministry of Finance said purchases would continue as long as oil prices remain above $40 per barrel, and sell forex if oil prices sank below that mark.

Poland's Central Bank said it could keep monetary policy loose for as long as two years if needed to boost growth. Earlier this week the Central Bank opted to keep its key benchmark interest rate at 1.5%. Polish assets reacted favourable to the news, with both Polish equities benchmarks and the zloty up.

EBRD issued international bonds for US$1.25bn maturing in 2021 with a 2% coupon. Bonds were sold at a price of 99.95% with an initial yield of 2.01%. Bookrunner: Bank of America Merrill Lynch, Barclays, Bank of Montreal, Morgan Stanley.

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