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The Daily Roundup

Citigroup goes for Saudi banking license – Bank of Sharjah prices benchmark sized bonds – Nigeria’s Zenith Bank to raise NGN100bn in new capital – Namibia CB assumed control of SME Bank – EEB raises triple tranche COP bonds – Venezuela could default in 2017 – GCL New Energy preps green bonds – China corporate offshore issuances outpace onshore – ALROSA prepays US$600mn loan – Ukraine sovereign bond yield rise on CB governor resignation rumours

Mar 1, 2017 // 6:16PM

Middle East & Turkey

Citigroup is said to be in the process of securing a banking license in Saudi Arabia after exiting the country ten year ago, Bloomberg reports. The bank is likely looking to take advantage of a huge increase in corporate banking activities inside the Kingdom, with many of the country's companies looking to tap into new sources of funding beyond the GCC.

Bank of Sharjah issued US$500mn in fresh bonds due 2022, pricing the notes at par to yield 4.23% - well under initial price thoughts. Bank ABC, Emirates NBD, JP Morgan, and National Bank of Abu Dhabi managed the sale.

Africa

Nigeria's Zenith Bank plans to raise up to NGN100bn in capital, it said in a notice to shareholders. The bank has not disclosed how it will raise the funds, but analysts suspect it could look to the local capital markets to raise a portion of the new capital.

Namibia's Central Bank has assumed control of SME Bank Limited, a lender focused on domestic small businesses. The Central Bank said SME Bank made questionable investments. "At this point, the Bank of Namibia is not satisfied with the information provided and is unable to render an objective opinion regarding the soundness or magnitude of the investments in question," The CB said in a statement.

Americas

Colombia's Empresa de Energía de Bogotá this week raised COP650bn peso in bonds across three tranches maturing in 7, 15 and 25 years. Proceeds of the issuance will partly go towards financing the development of new infrastructure, and partly to help refinance existing debt.

Paraguay could hit the market for up to US$500mn in new bonds as early as March after the country's Supreme Court ruled in favour of giving the government authority to issue sovereign bonds without authorisation from Congress. The country last tapped the international capital markets in March 2016, when it raised US$600mn.

The economic environment in Brazil is starting to show stronger positive momentum. Brazil's primary surplus for January rose to BRL36.7bn, far better than an expected BRL18.8bn. Analysts suggest lower discretionary spending and higher tax revenues drove the gains.

S&P Global warned that Venezuela's risk of defaulting on its debt obligations in 2017 is reaching new heights. The country has about US$10.5bn left in its reserves, partly stored in gold, and that inflation reached upwards of 460% in 2016. "In October 2016, PDVSA performed a distress debt exchange, which led us to lower our rating on PDVSA to ‘SD’ (selective default). In November, we raised the PDVSA rating to ‘CCC-’ with a negative outlook, reflecting S&P Global Ratings’ expectation that PDVSA could default again in the first half of 2017. The company faces US$9.5 billion external debt service in 2017. PDVSA’s debt is not guaranteed by the government, and the government’s debt does not have cross-default clauses connected with the debt of the national oil company," the rating agency said.

Asia

China's Minister of Human Resources Yin Weimin said the country plans to eliminate up to 500,000 jobs in the 'smokestack industries' in a bid to help further reduce pollution and eliminate redundancies. The country has already trimmed over 720,000 from these industries, which include metal smelting and heavy manufacturing.

Chinese corporates, led largely by the country's already heavily indebted property developers, borrowed more from international capital markets through Eurobonds than from domestic bond markets in 2017, according to data from Dealogic. According to the data firm, corporates in China secured US$26.1bn in offshore bonds deals so far this year, compared with US$21bn raised onshore.

China's GCL New Energy said it has secured regulatory approval to raise US$245mn in green bonds this year. The issuance, which is likely to be a private placement through its subsidiary Suzhou GCL New Energy Investment Co., will carry a tenor of three years.

China Aircraft Leasing Group Holdings issued a US$500mn dual-tranche bond, pricing a US$200mn 2024 tranche at par to yield 5.5% and a US$300mn 2022 tranche at par to yield 4.7%. China Everbright Bank, Citigroup, and DBS Bank were bookrunners on the sale.

A cash-strapped Mongolian government has this week reached a deal with the International Monetary Fund (IMF), World Bank, Asian Development Bank, and a handful of sovereign wealth funds that will see the country secure a US$5.5bn bailout, which includes a US$440mn loan. The country has been hammered by an economic slowdown in its closes neighbour and trading partner, China.

India's Bangalore Metro Rail is looking for fresh funding from a number of lenders including the European Investment Bank and the Asian Infrastructure Investment Bank for the Reach 6 Project to build Line 4 of the Bangalore metro. The project will comprise a 8.5km raised track line, a 14.5km underground portion, and 6 new metro stations.

The Asian Development Bank (ADB) and the Government of India signed US$375mn in loans and grants to develop the 800km Visakhapatnam-Chennai Industrial Corridor, the first phase of a planned 2,500km-long East Coast Economic Corridor (ECEC) designed to help stimulate the development of new manufacturing capacity in the country.

The Indian banking sector is likely to only recover marginally after a rocky year capped off by a demonetisation, S&P said. Nevertheless, it said higher working capital requirements brought about by increased commodity prices could support more loan growth.

Russia, CIS and Europe

Poland's Energa issued €300mn in 10-year notes this week. The notes priced at 98.892% to yield 2.2549%. BNP Paribas and JP Morgan managed the sale.

National Bank of Hungary left 3-month deposit rate at record-low 0.9% this week, but signalled it could move to raise rates if inflation exceeds the 3% target.

ALROSA prepaid a US$600mn loan to VTB Bank extended in 2014 until October 2018, the company said this week. The move reduced the company's total debt to US$1.7bn from US$2.3bn.

Concerns about the Ukraine Central Bank governor's possible resignation flag risks of a further delay with implementing IMF-required reforms and, so, official funding, incl. US$1bn of US-guaranteed sovereign bonds, according to analysts at ING. The yield on Ukraine sovereign Eurobonds due 2019 jumped to 7.42% today from 7.18% last week.

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Bonds & Loans
January / March 2020

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