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The Daily Roundup

Mongolia reached an agreement over US$440mn IMF loan package - Leftist Lenin Moreno on course to win Ecuador’s presidential election – Nigerian naira hits new black-market lows – Ghana suspend US$4.1bn bond issuance - Moody’s upgrade’s Russia’s sovereign outlook to stable - Russian Railways set the first coupon at 8.65% for RUB25bn domestic bond - Indonesian construction firm PT Hutama Karya preps a IDR5.5tn (US$412mn) bond for April

Feb 20, 2017 // 5:52PM

Middle East & Turkey

Saudi Arabia’s Samba Financial Group named Rania Mahmoud Nashar as CEO the second woman to ascend to a top finance position in recent days as the conservative kingdom goes through unprecedented social and economic change. Last week NBC capital CEO Sarah Al Suhaimi was named the first woman to chair Saudi Arabia’s stock exchange Tadawul. These appointments are significant in a country where the female unemployment rate is more than 34%.

Africa

Egyptian inflation has surged to a 30-year high, with the country’s 94m people facing price rises of 28.1% in the year to January — a sharp rise from the 23.3% figure recorded in December. On a more positive note, foreign holdings of Treasury bills rose to US$1.2bn in January, according to data from the Central Bank, is up from just US$30mn a year ago and US$110mn before November’s devaluation.

Nigeria naira hit a fresh low of 520 per USD on the black market on Monday, as retail currency traders tried to tackle the Central Bank’s recent decision to sell dollars to retail users through commercial lenders. The Central Bank plans to sell US$1mn weekly to each of the country's 21 commercial lenders at a rate of 375 naira to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates, Reuters reported quoting local traders.

Zambia's economic growth is seen rising to 4% in 2017 and 4.2% in 2018, the World Bank said on Monday, predicting a jump in copper prices and improved power supply. The government has forecast that the economy would grow 3.4% this year from around 3% last year due to low copper prices, power shortages, inflation and a government cash crunch that restricted investment into new projects.

The Government of Ghana has suspended the plan to issue a Gh¢700mn three-year bond in February 2017. This was part of government’s plans to issue Gh¢17.4bn (US$4.1bn) through bonds and treasury bills and other government securities. The funds were expected to be used for government finances and debt restructuring in the first three months of 2017.

The International Monetary Fund (IMF) says creditors may forgive part of Somalia’s outstanding US$5.3bn debt if the conflict-torn country takes clear steps toward reforming its economy and improving governance. However, Somalia would have to first clear arrears owed to the IMF, the World Bank and the African Development Bank to access fresh credit.

The Central Bank of Mauritius left its key repo rate at 4%, saying rising business confidence and public investment should support domestic output this year while an uptick in global commodity prices, especially energy, remain a key upside risk to inflation. The Bank of Mauritius, which cut its rate by 40bp last year, added it was still working on achieving "the necessary conditions" before implementing a new monetary policy framework.

Asia

JPMorgan Chase & Co. and BNP Paribas SA said foreign companies will sell more yuan bonds in China this year, after the government started allowing the two banks to underwrite corporate notes last month.

Taiwanese company Easywell Biomedical completed the issuance of T$200mn 1st series domestic secured convertible corporate bonds, Reuters reported Monday.

Indian companies are less concerned about hedging their oversees borrowings against currency volatility due to the Reserve Bank of India’s commitment to a stabilizing the rupee. The unhedged foreign-exchange exposure of local corporates and investors combined rose US$78bn between April 2014 and September 2016, Standard Chartered Plc’s calculations show, quoted by Bloomberg.

State-owned Indonesian construction firm PT Hutama Karya plans a IDR5.5tn (US$412mn) bond issue in April, aiming to tap into funds being repatriated under the country's tax amnesty programme, the finance ministry said on Monday. The government will guarantee the bonds and the finance ministry said investors buying them would help support government efforts to accelerate infrastructure development in Indonesia.

Philippine companies are expected to issue more local currency bonds to retail investors to reduce their dollar debt and trim currency risk, led by one of the country's largest conglomerates. San Miguel Corporation is targeting proceeds of PHP15bn (US$300mn) from the sale of fixed-rate peso bonds with tenors of five, seven and 10 years, with an oversubscription option of PHP5bn.

Mongolia reached an initial agreement with the International Monetary Fund for a three-year program that includes a US$440mn loan package as part of a US$5.5bn bailout programme to help the north Asian country with looming debt repayments. Mongolian bonds rallied on Monday after a US$5.5bn loan package was agreed, staving off a possible default. That bond, which the government hopes to soon swap for a new one, rallied 2 cents in price on Monday, with issues maturing 2018, 2021 and 2022 trading 1.1 cent, 3.9 cents and 4.2 cents higher respectively.

Latin America

Leftist government candidate Lenin Moreno was within striking distance of winning the first round of Ecuador's presidential election on Monday, as the Andean country's electoral body counted ballots late into the night. In a close-call stand-off with eight other candidates, Moreno was close to the threshold needed to avoid an April runoff and continue a decade-long period of leftist rule.

Grupo Aeroportuario de la Ciudad de Mexico (GACM), the state-owned company managing the construction of Mexico City’s new international airport is evaluating new Q4 bond sales and a loan refinancing. Last year GACM said it could print up to US$6bn in the cross-border bond markets over the next five years it also issued US $2bn in green securities last September.

Russia and CIS

Moody’s on Friday became the latest ratings agency to lift its outlook on Russia’s credit rating, upgrading it from ‘negative’ to ‘stable’, citing both a fiscal strategy — that is expected to lower the country’s dependence on energy and replenish its savings — and the gradual economic recovery. After confirming Russia’s Ba1 rating with a negative outlook in April 2016, the agency on Friday upgraded it to stable, pointing to the continued recovery in the country’s economy from a nearly two-year long recession.

Russia overtook Saudi Arabia as the world’s largest crude producer in December, when both countries started restricting supplies ahead of agreed cuts with other global producers to curb the worst glut in decades, according to Bloomberg. Russia pumped 10.49 million barrels a day in December, down 29,000 barrels a day from November, while Saudi Arabia’s output declined to 10.46 million barrels a day from 10.72 million barrels a day in November, according to data published Monday.

Vimpelcom (BB/Ba2/BB+) entered to a new revolving multi-currency facility worth up to US$2.25bn, the company announced on Friday. The term of the facility was set at 3 years, but the company is able to extend it by 2 more years. The new loan facilities will replace the existing US$1.8bn loan facilities attracted in 2014. 

Russian Railways (BB+/Ba1/BBB-) set the first coupon at 8.65% for its domestic bond issue worth RUB25bn, the company announced in its disclosure. The company’s 15-year issue has a 4- and 10-year put-option. The 2nd to 20th coupon rate was set equal to the first coupon rate, with plans to begin a Eurobond roadshow on 20-21 February and banks JPM and VTB Capital assigned to arrange meetings with investors regarding the placement of USD-denominated and possible RUB-denominated Eurobonds.

Kazakhstan's Central Bank lowered its base rate by another 100bp to 11%, but said "the potential of further easing of monetary policy is limited" as the new level reflects the long-run balance between price stability and financial stability.

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