MIDDLE EAST & TURKEY
Analysts expect Saudi Aramco, the world's largest oil company, to raise between US$800mn and US$1.6bn in a dollar-denominated sukuk that could be issued as early as the end of the first quarter 2017. The move could be an attempt to consolidate its debt in advance of an IPO planned for later this year.
Kuwait Projects Company (KIPCO) has mandated banks for a new benchmark sized bond issue, the company said this week. The issuance, which will be led by Citi, HSBC, Kamco and JP Morgan, is part of a €3bn MTN programme set up by the company last year.
Dubai Islamic Bank issued a US$1bn sukuk with a five-year tenor, maturing on 14 February 2022, marking the largest senior sukuk issuance by a financial institution globally. The issuance under DIB’s US$5bn sukuk programme carries a profit rate of 3.664% reflecting the strong demand and confidence, which global investors have in the UAE’s largest Islamic bank.
FMDQ OTC Securities Exchange signed a Memorandum of Understanding (MoU) with Dow Jones Indices that will see the latter adopt the S&P Nigeria Sovereign Bond Index, which tracks local currency sovereign debt, and move the two organisations said would boost visibility of the country's bond markets.
Kenya's public sector debt has nearly doubled over the past four years, rising from KES1.9tn in 2013 to KES3.2tn, or 48% of GDP, according to the latest government figures. The data has once again raised questions about the government's capacity to trim the deficit as it missed its tax revenue collection targets.
Authorities in Peru plan to seek the arrest of former President Alejandro Toledo in connection with an investigation into millions of dollars in bribes paid by Brazilian construction company Odebrecht to win public works contracts in the country. The former president is under investigation on suspicion that he received US$20mn in bribes from Odebrecht in exchange for awarding the company a major highway contract when he was in office, according to prosecutors.
The Central Bank of Honduras left its monetary policy rate at 5.5%, noting that inflation in January was above that of the same month last year, but below the bank's target range. The Central Bank of Honduras, which cut its rate by 75% last year and most recently in June, added that net international reserves remain at an adequate level, as Honduras' inflation rate rose to 3.44% in January from 3.31% in December.
Argentina's Central Bank kept its benchmark policy rate unchanged at 24.75% this week, following a number of other EM central banks that held rates this week.
Peruvian mortgage bank Fondo Mivivienda tapped its 3.5% 2023s this week, pricing the US$150mn trade at 99.802% to yield 3.537 (UST+170bp), and issued a new PEN1.5bn 7-year bond at 7.0%. Morgan Stanley and Scotiabank led the sale.
The head of Brazil's Central Bank Ilan Goldfajn said it will look to introduce regulatory changes to improve credit guarantees and reduce the share of subsidized lending in the Brazilian credit market. Goldfajn said the Central Bank's goal is to ensure credit growth remains sustinable.
Venezuela's Central Bank is mulling over a potential repurchase agreement that would provide US$1bn liquidity injection from investment bank Nomura, in exchange for bonds issued by state oil company PDVSA, Reuters reported on Wednesday. Under the proposed “repo” transaction Nomura would receive PDVSA bonds with a face value of US$3bn, maturing in 2022, the agency claims, citing documents seen by their reporters.
Bank of China hit the market this week with a US$1.2bn 3-year trade issued at LIBOR+77bp and priced at par. ANZ, Bank of China, Bank of Communications, BOC International, Citigroup, Commonwealth Bank, HSBC, ICBC, JP Morgan, Mitsubishi UFJ Financial Group, ScotiaBank, and UBS managed the trade.
Agricultural Bank of China launched a US$500mn maturing in 2022 with a 3% coupon. ANZ, Bank of Communications, Bank of China, Citigroup, Commonwealth Bank, HSBC, ICBC, JP Morgan, Mitsubishi UFJ Financial Group, ScotiaBank, and UBS managed the sale.
China's Singyes Solar Technologies Holdings Limited issued fresh bonds maturing in 2019 this week. The solar technology provider issued US250mn in 2-year notes with a coupon of 7.95% and priced at par. Bank of China, China Everbright Bank, Guotai Junan Securities, HSBC, SBI Holdings, and Sun Hung Kai & Co. led the transaction.
Fresh data from China's Central Bank show its foreign exchange reserves dipped below US$3tn in January, their lowest levels in nearly 6 years. Reserves fell by US$12.3bn in January, and are down almost US$1tn from their peak in 2004.
India's Central Bank surprisingly left its benchmark repo rate at 6.25% and shifted its policy stance to ‘neutral’ from ‘accommodative’ while it continues to assess how the temporary impact of last year's demonetization affects inflation and the economy's output gap. The RBI cut its rate by 50bp in 2016, predicting growth of 7.4% for next financial year.
Indonesian real estate developer Pakuwon Jati Tbk PT tapped the debt markets this week with a US$250mn 7-year bond. The notes carry a coupon of 5% and were sold at par. Morgan Stanley and UBS were bookrunners on the deal.
Indonesian financial services firm Astra Sedaya Finance will soon issue fresh senior unsecured notes under its existing IDR2.3tn senior bond programme, according to a research note from Fitch.
Thailand's Central Bank left its policy rate at 1.5%, as widely expected, but turned more optimistic about the outlook and expects the economy "to recover at a faster pace compared with the previous assessment despite facing uncertainties especially on the external front." The Bank of Thailand maintained its rate last year after cutting it by 50bp in 2015, added it expects inflation to continue to remain on a "upward trajectory" with financial conditions accommodative and conducive to economic recovery despite the rise in bond yields in recent months.
RUSSIA, CIS & EUROPE
Russia's Megafon inked a RUB35bn (US$588mn) loan with Sberbank this week. The loan, due 2024, will be used to finance the company's acquisition of Mail.ru.
Russia’s biggest corporates have seen largest losses this week since July, as the recent slump in oil price continues to deflate Russian stock. In three days Rosneft shares were down 3.14% as of Wednesday, lowest point in two weeks, while Gazprom’s stock lost 2.9%, lowering the company’s value by RUB110bn.
Russia plan to offer investors the option to choose between buying new Eurobond issues for cash or to swap the country's outstanding papers for new debt, the Finance Ministry's debt department head Konstantin Vyshkovsky said this week, a move that could help allay concerns around sanctions. The official added that was unlikely the government would issue fresh bonds denominated in yuan.
Czech mortgage lender Home Credit could issue up to CZK3bn (US$118.53mn) in fresh bonds, the company said this week. The bonds will pay a coupon of 3.75% and will mature in 2020.
The Polish zloty drifted further from its four-month highs against the euro on Wednesday after the Polish Central Bank kept interest rates on hold and stuck to a wait and see strategy. The currency has outperformed Central European peers in the last two weeks, supported by better than expected economic output and manufacturing sentiment data.
Romania's Central Bank kept its monetary policy rate at 1.75%, unchanged since May 2015, but said inflation is forecast to run at a lower level and its rise will be slower than previously expected due to disinflationary supply-side shocks in recent months.