MIDDLE EAST & TURKEY
Saudi Arabia’s Energy Minister has said President Donald Trump’s election will be good for the oil industry, playing down concerns over the impact of his “America First” policies for the export-reliant kingdom. Khalid al-Falih said Saudi Arabia is considering increasing its investment in the US encouraged by the new White House administration’s pro-industry and pro-oil and gas, he told the BBC.
Saudi Arabia's second largest mobile telephone operator Mobily has signed a SAR7.9bn (US$2.11bn) syndicated loan with Al Rajhi Bank, Banque Saudi Fransi, National Commercial Bank, Riyad Bank, Samba Financial Group, and Saudi British Bank. Proceeds from the loan will be used to repay existing facilities.
Dubai has overtaken Malaysia as the jurisdiction with the highest volume of sukuk issuance, according to a Citi report. Dubai is the largest issuer of sukuk with 23% of the market, closely followed by Malaysia, with 21.4% of issuances. Global sukuk issuance in 2016 stood at US$65bn, according to Fitch Ratings.
Kuwait's Finance Minister Anas al-Saleh told reporters this week that the government is not clear on the timeframe around its highly-anticipated Eurobond sale. Reports have swirled since last November, when the sovereign announced it would sell up to US$10bn in bonds in early 2017. The news could be a signal that the government is keen wait until April, when the funding needs for the following financial year will be clearer.
The African Development Bank (AfDB) has approved two credit lines worth a total of US$90mn to support SMEs in Kenya and boost trade finance in Africa. The financial package includes a US$50mn line of credit and a US$40mn trade finance line of credit extended to the Commercial Bank of Africa, which will on-lend to SMEs and local corporates in the trade, infrastructure, manufacturing, agriculture, transport and construction sectors in Kenya.
South Africa's biggest union of mineworkers plans to launch a strike in coal mines in the "coming weeks" over the structure of industry wage talks, its spokesman, Livhuwani Mammburu, said on Wednesday. The National Union of Mineworkers is opposed to the coal companies' intention to negotiate wages on an individual basis, rather than collectively under the Chamber of Mines, an employer industry body.
Nigeria expects to raise about US$300mn through the sale of diaspora bonds with maturities of five to seven years, according to one of the sovereign's advisors, but will likely wait until the summer to price the notes. The African country is currently planning the sale of a US$1bn Eurobond in February.
Kenya's efforts to raise fresh capital through a new syndicated loan with regional and global lenders have been held up by a US$250mn loan being made by PTA Bank to the sovereign, according to a report from Reuters. The sovereign is looking to raise up to US$1bn in a syndicated loan with Citi, RMB, Standard Bank and Standard Chartered Bank, but current negotiations with PTA Bank over the US$250mn are reportedly complicating the US$1bn syndicated deal.
The IMF has reportedly reopened negotiations with Mozambique over a loan programme that was threatened by the sovereign's recent default on US$60mn in coupon payments to bond holders. The country is reportedly holding up to US$1.4bn in undisclosed loans, casting further doubt on its ability to reach a new agreement with the IMF anytime soon, likely leading to further erosion of the East African country's finances.
Ashok Chakravarti, an economist and advisor to Zimbabwe's President has said the country will need up to US$900mn to help escape a liquidity crisis currently brewing in the country's financial system. Chakravarti said the country currently has US$6.2bn in deposits and US$304mn in real cash circulating in the economy. Official statistics suggest the country needs upwards of US$700mn to fill the gap.
A number of Nigerian electricity firms are said to be seeking foreign currency-denominated loan guarantees from the federal government in a bid to ease access to hard currencies, which are in short supply in the country.
Stoneway Capital, a Canadian private equity firm, is set to place US$500mn in bonds this month, the proceeds of which will be used to develop power generation assets in Argentina. The firm recently secured a 10-year power purchasing agreement on the new power plants from the country's energy regulator CAMMESA. The sale is being managed by Jefferies and Seaport Global.
The Central American Bank for Economic Integration (CABEI) approved a US$105.4mn loan to Nicaragua for the partial financing of the Juan Pablo II Road Rehabilitation project and associated overpasses.
Peru's Chinchero Airport, a US$508mn PPP and a key component of Pedro Pablo Kuczynski's infrastructure drive, has been delayed again. The lead concessionaire, Andino Investment Holding, has reportedly been held up by negotiations on final pricing of the project finance facility.
Growth in Mexico cooled in the fourth quarter of 2016, growing just 0.6% according to the country's national statistics agency INEGI. This was down from 2.2% seen during the same period in 2015. According to the agency, weak demand for Mexican goods in the US played created a drag on factory output, while the agricultural sector actually expanded by about 0.4%.
Brazilian President Michel Temer is to announce plans to amend the country's bankruptcy laws amid growing levels of loan delinquencies, debt restructurings and bankruptcy filings. The laws have been scrutinised - particularly by foreign investors - for not being as creditor friendly as those in other jurisdictions. According to a report from Reuters, the plans could focus on relieving consumer debt burdens by making it easier to qualify for government assistance, such as the government-backed home ownership programme.
The Brazilian real weakened 0.7% this week after the Central Bank suggested it could allow some currency swaps due in March to expire. The sale of swaps was put on hold following the election of Donald Trump in the US, but the bank's governor Ilan Goldfajn said it could resume the process as soon as next month after rolling over the US$6.4bn worth of swaps maturing Wednesday.
The Brazilian Development Bank (BNDES) disbursed BRL 88.3bn (US$28.03bn) in investment projects in 2016, down 35% over the previous year, the bank revealed this week. The stats should not shock the market given the government's limited fiscal headroom to support the bank.
Workers at BHP Billiton Ltd.’s Minera Escondida copper mine in Chile have voted against the company’s latest wage offer, opening the door for a potential strike. Late last year, the company secured funding from a syndicate of twelve lenders for US$1.2bn.
Economic data out of China is looking positive. Manufacturing purchasing managers index was 51.3 in January, up slightly from a median estimate of 51.2 in December. Non-manufacturing PMI was at 54.6 compared with 54.5 in December.
Ban Ki-moon, the former secretary general of the United Nations, on Wednesday announced he will not run in presidential elections in South Korea amid falling approval ratings.
South Korea's Kookmin Bank issued a US$50mn bond maturing in 2018, carrying a coupon of 3MLIBOR+44bp. The bonds were sold at par. Mitsubishi UFJ Financial Group was the sole bookrunner on the trade.
Thai banks' non-performing loans (NPLs) are expected to fall over the next six months, the country's Finance Minister Apisak Tantivorawong told reporters this week. According to data from the country's Central Bank, NPLs rose 0.34% in the second quarter last year to hit 2.89% of loan portfolios.
Arvind Subramanian, chief economic adviser at India's Finance Ministry questioned the methodology deployed by ratings agencies this week, arguing that India has been penalised despite an improvement in fundamentals. In a separate report, the Finance Ministry questioned by S&P upgraded China's credit rating to 'AA-' last year despite a noticeable pattern of rising debt and slowing growth, while India's remained stuck at 'BBB-'. The government also revealed it would repurchase Rs750bn worth of bonds during the 2017-18 financial year.
India's recapitalization needs stand at roughly US$90bn by 2019, according to a recently published report from Fitch Ratings. The scale of the burden puts India in a tough position, but analysts suspect the move will translate into increased sovereign borrowing over the next two years.
India is seeing record outflows from the country's rupee-denominated government bonds ahead of Prime Minister Narendra Modi’s unveiling of the budget on Wednesday. According to data from Bloomberg, international funds have pulled Rs392bn (approx. US$5.8bn) out of the country's sovereign notes since the end of September 2016. Foreign outflows have accelerated in recent weeks, with the government expected to announce record recapitalisation needs.
India will change some personal tax rates to encourage people to disclose their incomes as well as put more cash in the hands of consumers following the recent demonetization. The personal tax rate will be halved to 5% on incomes between Rs250001 (US$3,697) and Rs500000, Finance Minister Arun Jaitley said Wednesday. A surcharge of 10% will be levied on the personal tax paid on incomes between INR5mn and INR10mn, he added. The country’s Finance Minister also announced on Wednesday a proposal to amend the Central Bank's act for issue of electoral bonds for political funding.
An Indian court on Tuesday issued a non-bailable warrant against business tycoon Vijay Mallya in the IDBI Bank loan default case as the CBI sought his extradition from the UK. Mallya and nine others connected to him and Kingfisher airline were charged with fraud last 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
Russian steelmaker TMK announced it would sell a 13.44% stake to raise funds to purchase its own shares from VTB. TMK will sell 138,888,888 ordinary shares in the secondary public offering (SPO), buying back the same amount from VTB, in a bid to raise upwards of US$200mn.
Polyus Gold placed new US$800mn 6-year Eurobond carrying a coupon of 5.25%, at the tight of the 5.25-5.50% IPT range.
The Central Bank of Russia meets Friday and is likely to keep rates steady. CPI in the country is decelerating to 5.4%, above the Bank's target of 4% and above the 5.1% seen during the same period last year.
Escalating conflict in eastern Ukraine has the potential to stymie improving Russia-US relations, with yields rising on both Ukraine’s and Russia's sovereign government bonds on Wednesday.
Romania’s President urged the government to reverse a surprise decision to quash corruption investigations into officials and annul some other convictions after the measures drew thousands of protesters into the streets of major cities. About 12,000 people rallied in freezing temperatures late Tuesday in Bucharest, demanding the government step down, with thousands more gathering in other cities.