MIDDLE EAST & TURKEY
The Emirate of Ras Al Khaimah is said to be in talks with banks ahead of a possible US dollar bond sale, according to a report from Reuters. The Emirate last hit the bond market in 2015, selling a US$1bn 10-year sukuk in a deal arranged by Al Hilal Bank, Citi, JP Morgan, and NBAD.
It looks like the GCC Sovereign borrowing spree is far from over, with credit rating agency S&P forecasting up to US$275bn in issuances from countries like Kuwait, Qatar, Bahrain, and Saudi Arabia over the next three years. At the same time, the rating agency noted that liquidity in the region has improved, which could lead to greater domestic uptake of sovereign debt.
Kenya is floating US$288mn in treasury bonds to help finance the development of the country's infrastructure pipeline. The move comes just weeks after it cancelled plans to hold a similar auction, which is being managed by the country's Central Bank. The 12-year notes will carry a fixed 12.5% coupon and will be sold on28 February.
Nigeria successfully placed US$1bn in 15-year Eurobonds with a coupon of 7.875%, convincing investors of its reform plans, which include stimulating infrastructure investment on a massive scale. The sale was led by Citigroup and Standard Chartered, with Stanbic IBTC co-managing the deal. In related news, the country is aiming to finalise a reform plan that it will submit to the IMF, a crucial step in its bid to unlock a US$1bn loan from the multilateral institution.
Nigeria's federal government has outlined NGN52bn in projects to be financed through the issuance of green bonds, it said this week. The government has been working to issue its inaugural green bond as early as the fourth quarter this year.
Mexico's GACM is planning to issue an additional US$1bn in green bonds to finance the construction of Mexico City's new international airport, according to sources. Last September the state-owned group sold US$2bn in green bonds, split evenly between 10-year and 30-year tranches priced at T+275bp and T+325bp respectively. The bonds were heavily oversubscribed.
The acting president of Brazil's Congress Rodrigo Maia allegedly received up to BRL1mn in bribes from OAS, one of the country's largest builders, according to local press reports that cited police officials. The reported could jeopardize Temer's pension reform plans, which Maia strongly supported.
In a move widely welcomed by markets, Colombia's government announced it would eliminate a tax paid on local portfolio investments by Peruvian and Chilean pension funds, and could add Mexico, said David Salamanca, director of financial regulation at the Ministry Of Finance in an interview with Reuters. The agreement is modelled after a similar deal between Peru and Chile, and could go a long way towards deepening the country's capital markets.
Peru's Central Bank left the benchmark interest rate unchanged at 4.25%, the 12th consecutive month the bank has kept rates stable. The bank is hoping to trim inflation to the 1-3% range. Interestingly, the Central Bank did not address concerns brought forth by a number of credit rating agencies this week on the broadening Odebrecht scandal's impact on the country's growth prospects.
Capital flows to emerging markets are likely to be negative in 2017, the fourth straight year of net negative flows, the IIF said this week. The institute said the outflows will be led by China, which could see up to US$560bn in net negative capital outflows; about 25 other emerging market economies could see up to US$70bn of net capital inflows.
China’s trade balance recorded a US$51.4bn surplus in January, substantially higher than analysts expected. Chinese imports jumped 16.7% year on year, outpacing exports - which rose 7.9% year on year, suggesting the country kicked off the year with solid fundamentals.
Chinese real estate developer Future Land Development raised US$350mn in bonds maturing 2020. The bonds carry a 5% coupon and were priced at 99.656% to yield 5.0173%. Bank of America Merrill Lynch, Deutsche Bank, Haitong International Securities, HSBC, and JP Morgan were bookrunners on the deal.
The Asian Development Bank (ADB) returned to the US dollar bond market this week, pricing a US$3.75bn 5-year note. The bonds pay a coupon of 2% and were priced at 99.434% to yield UST+26.95bp. The trade was managed by Bank of America Merrill Lynch, HSBC, Morgan Stanley, TD Securities, BMO Capital Markets, BNP Paribas, Citi, Daiwa Securities, DB, DBS Bank, ING, JP Morgan, Mizuho International, and RBC Capital Markets.
Bangladesh has short-listed development projects worth almost US$4bn and is hoping for a credit line extension from neighbouring India to help fund them. India's Prime Minister Narendra Modi is expected to announce the funding arrangements when he next visits the country, which has already secured US$3bn from India in recent years to finance a portfolio of projects.
The Reserve Bank of India (RBI) unexpectedly shifted its monetary policy outlook from 'neutral' to 'accommodative' this week, a move that could boost inflation and cut short a rally in the country's currency and bond markets. The move has already moved yields on India's benchmark 10-year government bonds up 10bp since it was announced Thursday. The move came the same day the bank approved raising up to Rs5bn in Basel III Tier 2 bonds in 2017.
RUSSIA, CIS & EUROPE
Russian foreign exchange reserves grew to US$394.1bn, the second monthly increase in a row, the country's Central Bank reported this week. Russian inflation declined to 5% in February, a further sign of stabilisation.
Gazprom placed two domestic rouble-denominated 7-year bonds worth RUB15.0bn each this week. The first issue was broadly marketed and placed with a final coupon of 8.9%, inside Initial Price Thoughts of 9-9.20%. The second issuance was a private placement.
Alfa-bank set the final coupon on its 10-year ruble-denominated senior unsecured Euroclearable RegS bonds at 9.25%. The bank could price as early as Friday.
RusHydro is reportedly considering a euro-denominated Eurobond sale in 2017, Interfax reported this week. The company said it could issue up to RUB82.7bn with international and domestic investors, but the timing of any issuance will depend on market conditions.