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The Daily Roundup

Ahli Bank of Qatar sets final guidance on bond – Majid Al Futtaim could sell benchmark notes to help finance Geant stake acquisition – US$2.5bn World Bank loan to Nigeria contingent on FX reform – Nigeria to make Paris Agreement announcement alongside green bond launch – South Africa slaps fine on over a dozen banks – Terrafina nails US$150mn refi – Algar Telecom readies dual-tranche debenture – India banks struggle with bad loans – VTB bank privatisation put on hold

Feb 16, 2017 // 6:15PM

MIDDLE EAST & TURKEY

Ahli Bank of Qatar has set final guidance on a follow-up benchmark sized bond at MS+175bp, with the leads looking to tighten pricing to MS+160bp, according to a note from MUFG. The US dollar benchmark sized notes are due to be issued as part of its US$1.5bn MTN programme launched last year alongside its debut transaction.

Abu Dhabi is unlikely to hit the market this year, according to a report from Reuters. The news agency sited sources who claimed that the emirate may not look to tap the market until 2018, following a non-deal roadshow with Asian investors.

Duabi's Majid Al Futtaim Holding, which operates the Carrefour brand of supermarkets in the region, is said to be mulling the sale of a benchmark-sized dollar bond. Proceeds from the bond sale could help boost its capital base as it looks to acquire a controlling stake in Geant Hypermarket, a UAE-based competitor.

According to Fitch, plans to introduce value-added tax (VAT) in Gulf Cooperation Council (GCC) member states could create operational risks for companies and put pressure on EBITDA and cash flows in some industries as the markets adjust. The main long-term risk from the introduction of VAT is therefore the potential for errors in collecting and accounting for the tax that could leave companies liable for the cost themselves, the rating agency explained.

The government of Oman is considering financing structures that let it get advance payments from oil traders, reducing the government's need to borrow more money from banks, Reuters reported, quoting sources in a local bank. Under the proposed structures, Oman's national oil company might get paid as much as two years before oil was delivered, in exchange for price discounts on the oil, the sources said.

Oman Development Bank (ODB) said it has lent OMR272mn to a range government organisations and project sponsors over the past 7 years, the bank said at a recent seminar in Muscat. The bank said it would double down on lending to small and medium-sized businesses, which often struggle to gain access to long-term credit.

AFRICA

The outlook for South African Real Estate Investment Trusts (REITs) will remain robust in 2017 despite the challenging local operating environment, according to a recent note from Moody's. The rating agency expects the performance of Growthpoint Properties Limited (Growthpoint, Baa2/Aaa.za negative), Redefine Properties Limited (Baa3/Aa2.za stable), Fortress Income Fund Limited (Fortress, Baa3/Aa3.za stable) and Hyprop Investments Limited (Baa3/Aa3.za stable) to remain resilient, thanks to quality properties in prime locations, broad sector/tenant diversification and offshore property exposures.

South Africa's Competition Commission has recommended steep fines against a number of banks for FX price fixing involving the rand since 2015. Bank of America Merrill Lynch, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., and Macquarie Bank Limited could be liable to pay fines of up to 10% of their annual turnover.

The International Monetary Fund (IMF) said it would consider extending an aid deal originally signed with Ghana in 2015, the lender said. Ghana has already used up half of the US$918mn pledged by the IMF, according to Reuters. The country’s economy is currently dogged by rising inflation and high levels of government debt.

Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL), an arm of the Central bank of Nigeria, has announced plans to launch a US$300mn agribusiness loan project for young farmers across the country. The aim of the project, which is being funded and managed in part by the Federal Ministry of Agriculture and Rural Development, is to help young entrepreneurs in developing their businesses.

The World Bank has reportedly agreed to give Nigeria a US$2.5bn loan, according to local press reports. Timing around the loan's disbursement has not been revealed, but the first US$1.5bn tranche's release will be dependent on the country's ability to reform is forex regime. The gulf between the black market and official pricing on the naira has grown by about 40% since the partial float last year. the official retail exchange rate is around NGN305 per US dollar, with most exchanges buying and selling at above NGN500 per dollar.

Fitch Ratings has revised the outlook on four Nigerian banks from 'stable' to 'negative'. Zenith Bank, GTB, Diamond Bank and FBN/FBNH have had their outlooks cut due to concerns over deteriorating asset quality and a challenging FX outlook. The recent Nigerian sovereign outlook revision has also weighed on Zenith and GTB.

Nigeria's Minister of Environment, Amina Mohammed, said this week the government plans to adopt the Paris Agreement climate targets alongside an announcement on its proposed green bond during the first quarter of 2017. Sources suggest the government is still trying to finalise the group of projects and assets that will be ringfenced to receive proceeds from the issuance.

In a recent visit to Angola, the China Development Bank said it would continue to financially support projects in the country – whose economy has struggled significantly as a result of low oil prices. The bank is supporting about 25 projects in Angola, with a total investment of US$1.5bn. Angola is using oil as a form of payment for some of these projects, according to the country's Ministry of Finance.

The African Export-Import Bank (Afreximbank) and Ecobank have signed a US$500mn memorandum of understanding to finance private sector projects and trade finance transactions in Africa. Under the agreement, which is aimed at promoting intra-African trade, the banks have committed to “design joint innovative tailor-made financial instruments and solutions to support private sector corporates, select strategic public sector institutions, as well as SMEs,” according to an Afreximbank statement.

AMERICAS

Mexican real estate investment trust Terrafina closed a US$150mn 10-year term loan in a bid to refinance existing debt and take advantage of more aggressive pricing. The loan carries a fixed rate of 4.75%, lower than the LIBOR+3.75% and 5.09% fixed rates paid on existing facilities, the company said in a statement.

Bolivia is looking for up to US$500mn in fresh investment to build sewage treatment facilities in La Paz, Sipe, Vinto, Quillacollo and Sacaba, Deputy Water and Sewerage Minister Julia Collado told state news agency ABI this week. Bolivian President Evo Morales has pledged close to US$50bn to be put towards investing in infrastructure development over the next five years, but the move has raised questions about how the country, which carries a Ba3 rating with a negative outlook from S&P, will raise the necessary financing.

Brazilian telco Algar Telecom is preparing to sell BRL320mn split between two tranches, the company said this week.

ASIA

Issuers in India raised US$3.3bn in international bond issuances since the start of 2017, or roughly 40% of the volume of international bonds issued throughout the whole of 2016, according to data from Dealogic. The bonds, mostly issued by state-owned and blue chip companies, are a sign of growing confidence in the country's economy, while slightly higher yields continue to attract international investors.

Bad loans in the Indian banking system continue to persist despite a recent boost in performance following the government's demonetisation plans executed last year. Non-performing loans as a percentage of overall loan books for Indian banks rose to 9.5% in Q4 2016 according to Credit Suisse, more than double the level of NPLs in March last year.

China's Qinghai Investment Group issued US$300mn in bonds maturing in 2020. The bonds were priced at par and carry a 7.25% coupon. EB International Capital Corporation, DBS Bank, VTB Capital, and Skyway Securities Group managed the trade.

RUSSIA, CIS & EUROPE

US Secretary of State Rex Tillerson said that the United States was ready to work with Russia if there were common areas for cooperation, but said Moscow had to adhere to commitments made over Ukraine. "As we search for new common ground we expect Russia to honour its commitment to the Minsk agreements and work to de-escalate violence in Ukraine," Tillerson told reporters after meeting with his Russian counterpart Sergei Lavrov.

Demand for Russian steelmaker Severstal’s 4.5-year dollar-denominated Eurobonds maturing in August 2021 exceeded US$1.6bn as the company issued a yield guidance of about 4%. Severstal held a road show in Europe and the U.S. on Wednesday, with Citi, ING, JP Morgan and SG CIB appointed as the organizers. Earlier in February, Severstal sold US$250mn convertible Eurobonds with a zero coupon and a 3-year buyback offer.

Partial privatization of Russia’s state-owned VTB bank is likely to be postponed until after the Western sanctions are lifted, Russia’s finance minister Anton Siluanov suggested in an interview to Russia’s Interfax agency on Wednesday. 

Kazkommertsbank raised KZT200bn through a credit line provided by the National Bank of Kazakhstan, the company disclosed this week.

Fitch says that announcements and actions by the Kazakh authorities signal it is stepping-up its support of the banking sector, which could result in a significant improvement in the asset quality of the country's banks. Earlier this month the government announced it would inject up to KZT2rn through the problem loan fund for purchases of distressed loans from troubled banks.

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