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The Daily Roundup

DIB approves US$5bn sukuk programme – Bank Muscat to raise US$500mn through syndicated loan - Barclays to pay up to US$1bn to “divorce” from African branch – US officials look to calm Mexican and EU partners amid Trump uncertainty – Suzano revises paper tissue segment investment to BRL540mn – China appoints new head of nation’s banking regulator - India and the ADB agree a US$500mn loan deal

Feb 24, 2017 // 5:39PM

Middle East & Turkey

Dubai Islamic Bank, the biggest Sharia-compliant lender in the emirate, announced the approval of a US$5bn sukuk programme that will allow it to raise funds if needed at a time when the economy is slowing and liquidity is tight amid low oil prices. The board reserved the right to issue any or other similar instruments at a time of its pleasing, the bank said in a statement to the Dubai Financial Market. In January, the bank listed a US$1bn sukuk on the Nasdaq exchange in Dubai, bringing its total issuances on that exchange to US$4.25bn.

Bank Muscat, Oman's largest bank by assets, is raising US$500mn through a syndicated loan, according to reports in the local media. The three-year loan refinances a US$600mn facility maturing in March that the Omani lender raised in 2014. Bank Muscat's refinancing facility offers an all-in pricing of 170bp over the Libor. The pricing comprises a 1.55% interest margin plus 45bp in banks' upfront fees, sources said, quoted by Times of India.

Africa

Barclays has agreed to pay Barclays Africa nearly US$1bn to fund investments needed for it to split from its African business, paving the way for the British bank to cut its stake to below 50%. Barclays is in the middle of an overhaul that includes cutting its holding in the African business as part of broader plan announced a year ago, to focus on the United States and Britain.

Nigeria aims to rise the proportion of government spending devoted to infrastructure to 30% from 10% and to mobilise private capital for additional funding, Finance Minister Kemi Adeosun said on Thursday. The government has laid out plans to spend a record NIN7.29tn naira in 2017, up from NIN6.06tn budgeted for last year, but must also find funds to cover a big shortfall in the budget resulting from lower prices for oil, its main export.

South Africa's Central Bank wants commercial lenders involved in the rand currency rigging scandal to be held accountable, deputy governor Daniel Mminele said on Friday. South Africa's Competition Commission said last week that it had found more than a dozen local and foreign banks had colluded to coordinate trading in the rand and the U.S dollar using an instant chat room called "ZAR Domination".

The government of Mozambique is waiting for the Export-Import Bank of China to approve a loan of US$60 million to start the construction of Chongoene airport, in Gaza province, the Minister of Transport and Communications said recently, quoted by the local press. Minister Carlos Mesquita, who visited the site where the airport will be built, said the feasibility study and the environmental impact study had been completed and now the government was awaiting approval of the loan to start building the plant in an area of approximately 4,000 hectares.

Latin America

Rex Tillerson, US secretary of state, struck a conciliatory tone during a visit to Mexico, saying the neighbouring countries had an opportunity to upgrade their economic relationship. After meeting Mexican officials during his second mission as the top US diplomat, Mr Tillerson said the countries had agreed to “seize the opportunity to modernise and strengthen our trade and energy relationship”. Meanwhile, US vice-president Mike Pence, on a visit to Brussels this week, pledged America’s “steadfast and enduring” commitment to the EU. These remarks may calm global concerns about US foreign and trade policies raised by Donald Trump’s tough anti-globalist rhetoric.

Brazilian wood pulp and paper producer Suzano Papel & Celulose SA raised the estimate for planned investments in the paper tissue segment to BRL540mn (US$176mn) from a previous BRL425mn. In a Friday securities filing, Suzano said the tissue segment of the Mucuri unit is slated to begin production in the third quarter, while tissue production at the Imperatriz unit is set to start in the fourth quarter.

Argentina's industrial production fell 1.1% in January from the same month a year earlier, national statistics agency Indec said on Thursday, quoted by Reuters. The drop was the smallest year-on-year since February 2016 and marked the third consecutive month of smaller declines in a sign that Argentina's prolonged recession could be nearing its end.

Asia

China has appointed Guo Shuqing as the new head of the nation’s banking regulator, local sources said. Guo is replacing Shang Fulin, who is retiring, according to Bloomberg, which cited anonymous sources. Guo, 60, was appointed as governor of Shandong province in eastern China in 2013. Before that, he was chairman of the China Securities Regulatory Commission, another leading regulatory body. Guo’s other financial-sector roles included chairman of China Construction Bank Corp., the nation’s second-largest lender, and head of the State Administration of Foreign Exchange.

The creation of a 'bad bank' could accelerate the resolution of stressed assets in India's banking sector, but it may face significant logistical difficulties and would simultaneously require a credible bank recapitalisation programme to address the capital shortfalls at state-owned banks, Fitch Ratings reported Friday. According to the analysis, India's banks have significant asset-quality problems that are putting pressure on profitability and capital, as well as constraining their ability to lend. A bad bank that purchases stressed assets and takes them to resolution was featured in the government's latest Economic Survey, and in a speech on Monday by a senior Reserve Bank of India official.

The government of India, in consultation with the Reserve Bank of India(RBI), has decided to issue Sovereign Gold Bonds 2016-17 Series IV. Applications for the bond will be accepted from February 27 to March 3. The bonds will be issued on March 17 and will be sold through banks, the Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges such as the National Stock Exchange of India Limited and the Bombay Stock Exchange.

India and the ADB today signed a US$500mn loan pact to expand inter-regional power connectivity in the country, and strengthen transmission system to accommodate renewable energy-generation capacity. The project, which is expected to be completed by December 2020, will help build 800 kilovolt (kV) and 320 kV High Voltage Direct Current (HVDC) converter stations and 765 kV power transmission systems in India, the multilateral lending agency said in a statement.

Russia, CIS and Europe

The Russian rouble firmed slightly against the dollar in early trade on Friday, pricing in gains in oil prices the previous day when the Russian market was closed. On Friday the rouble was 0.1% stronger against the dollar at 58.03 but lost 0.3% to 61.51 versus the euro. It was unclear if the Central Bank kept on buying dollars for the finance ministry's coffers on Friday. Starting from early February, the CBR had been buying around US$100mn a day.

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