Middle East & Turkey
Egypt's Minister of Finance Amr al-Garhy said he would propose a gradual introduction of a stamp duty on stock market transactions, in an effort to minimise the impact on trade. The government previously imposed a levy on such transactions in 2013 but scrapped them a year later, replacing it with a capital gains tax.
Oman plans to borrow up to US$5.5bn to finance the country's deficit in 2017, according to a report from Bank of America Merrill Lynch. The sovereign could issue up to US$2bn in fresh bonds this week as part of its deficit financing plans for the fiscal year. The 2017 budget targets narrowing of the fiscal deficit (excluding net grants) to OR3bn, based on an oil price assumption of US$45 per barrel. The bank is most concerned about the rapid increase in debt, which stood at US$19.7bn or 32.6% of GDP atthe end of 2016, up from 4.9% of GDP just two years prior.
Bank Muscat's Islamic banking window Meethaq has secured approval from the country’s Capital Market Authority (CMA) to launch its first OMR100mn sukuk programme. The programme will see the bank target Omani retail investors.
Dubai ship operator Gulf Navigation Holding PJSC is said to be weighing up a share sale or Islamic bond issuance in a bid to fuel the company's expansion, according to its Chief Executive Officer Khamis Juma Buamim. In an interview with Bloomberg, Buamim said the company hopes to nearly double its fleet over the next four years.
The State of Kuwait has mandated Citigroup, HSBC and JP Morgan to lead the sale of the sovereign's highly anticipated dual-tranche bond in March, according to a report from IFR. The leads are joined by Deutsche Bank, NBK Capital and Standard Chartered as bookrunners on the sale.
Pakistan's Prime Minister Nawaz Sharif and his Turkish counterpart Tayyip Erdogan met this week in Ankara to reaffirm their commitment to developing stronger economic and political ties between the two countries. The two concluded a number of agreements that sought to boost Turkish investment into Pakistan, and encourage the participation of Pakistani companies in Turkish energy, transport, and road infrastructure projects.
Turkey has begun accelerating its bond buyback programme in a bid to soak up additional liquidity in advance of significant bond redemptions, data from Bloomberg show. The Turkish Central Bank bought TRY2.2bn (approx. US$609mn) in Turkish government bonds from the secondary markets, extending its holdings to TRY16.1bn. The Treasury has about TRY17.6bn in bond redemptions in March, its largest monthly redemptions in three years.
Mozambique will aim to deliver a concrete proposal for its debt restructuring to creditors before the end of March, according to local press reports. The sovereign has fallen behind on debt repayments on its US$767mn Eurobond, for which it missed a US$60mn payment in January; a US$535mn loan taken out by maritime security firm MAM, which it failed to repay in May last year; and another US$622mn loan with ProIndicus, for which a payment of US$122mn is due this month. Analysts warn that failure to make payment on the ProIndicus loan, due to Credit Suisse, could cause further distress within the domestic market because the loan was syndicated to a number of local banks.
Embattled natural resources firm DiamondCorp has reached an agreement with the Industrial Development Corporation of South Africa, enabling the company to secure a loan against its SA-based Lace Diamond Mine and access fresh capital that will be crucial to its recovery. The company has been hampered by persistent flooding at the mine, forcing it to be placed into business administration.
The recovery has continued apace in Brazil, with fresh IIF fund flow data showing the country saw US$5.6bn in net capital inflows in January 2017.
Brazil Central Bank analysts are predicting cuts in the key rate this year, with at least 25bp trimmed off the benchmark interest rate in 2017. The rate currently sits at 9.5%. Inflation is expected to reach 4.36%, the lowest it has been since 2009.
Mexico's Central Bank revised down its 2017 economic growth forecast on Wednesday to between 1.3-2.3%. In its quarterly inflation report, the Central Bank cited a number of risks including subdued consumer growth and lower business confidence resulting from concern around future US trade policy. "The central growth scenario in this report incorporates a certain deterioration in expected trade flows between Mexico and the United States, and lower foreign direct investment than was previously foreseen," the Bank said in a statement. In separate news, multiple reports suggest Mexico’s Central Bank is seeking to secure a swap line with the US Fed in an effort to increase US dollar liquidity. The last time Banxico sought to achieve this was in 2008 following the global financial crisis.
Mexican auto parts manufacturer Nemak, which is owned by multinational conglomerate Grupo Alfa, is looking to set up investor meetings ahead of a potential euro-denominated bond issuance next month. The move comes amidst a relative drought in the Mexican cross-border market, driven largely by concerns around the future policy direction of the US.
Cemex this week bought back US$475mn in notes maturing in 2019 and 2021, according to a note on the company's website. The company bought back US$385mn in senior unsecured notes maturing 2021 with a coupon of 7.25%, and US$90mn of notes maturing in 2019 with a coupon of 6.5%. Investors received US$1,081.25 per US$1,000 principal amount of 2021 notes and US$1,067.50 per US$1,000 principal amount of 2019s.
China South City Holdings Ltd is mulling a potential sale of unsecured notes to refinance existing maturities, and is said to be in the process of setting up investor meetings in Asia and Europe.
China’s Manufacturing PMI increased to 51.6 in February, slightly up from 51.3 and better than most analysts expected.
The BRICS Bank, also known as the New Development Bank, will lend between US$2-3bn this year - double what it lent last year, its president t K.V. Kamath told local press in China. Kamath said the bank has already approved seven key projects, according to the China Daily, and could focus on banking projects linked to China's "One Belt" infrastructure initiative.
Despite causing some short-term pain for the banking system, India's demonetisation is likely to be a credit positive for the country in the long-run, according to a recent note from Moody's. "In the medium-term demonetisation, will strengthen India’s institutional framework by reducing tax avoidance and corruption. It should also result in efficiency gains through greater formalisation of economic and financial activity, which would help broaden the tax base and expand usage of the financial system," the rating agency said in a recently published report, adding that the move will also help bolster revenue generation through formalisation of the economy.
Malaysia's Central Bank kept its key rate unchanged at 3%, with the bank's officials looking increasingly optimistic about the country's economic prospects for the coming year. The country put in 4.5% GDP growth in the last quarter of 2009, an improvement on the 4.3% growth seen the previous quarter.
Just one day after securing a bailout from the IMF and a number of other credits, the Government of Mongolia announced an impending US$600mn Eurobond issue and exchange offer. Holders of US$476mn of the Development Bank of Mongolia's state-guaranteed March 2017 bonds agreed to exchange them for new sovereign bonds for new bonds yielding 8.75%. Credit Suisse and JP Morgan are managing the sale and exchange offer.
Russia, CIS and Europe
Russia's Central Bank is to open an office in China later this month in a bid to help foster deeper linkages between the two countries' capital markets, according to a senior CBR official.
Russian gas producer Gazprom has raised €700mn (approx. US$739mn) in a five-year loan from Credit Agricole, according to the company.
Investors poured into hard currency bonds in Russia earlier this year, fund flow data from the IIF show. Russian hard currency capital inflows were up US$2.4bn at the end of January 2017 after encountering steep outflows of almost US$11bn in December last year.
Russian authorities have arrested Tatfondbank's former deputy chairman Meschanova Sergei on fraud charges this week. He is among three other senior bank executives accused of siphoning off over RUB90bn of deposits into a slush fund managed by TFB Finance, a trust set up by the company. The troubled lender sent proposals to investors last month detailing a bailout plan after it reported the bank was struggling with liquidity challenges.
Evraz, a miner based in the UK with operations mainly in Russia, plans to buy back two issues of Eurobonds maturing in 2018 and 2020 for a total of US$952.5mn, the company said this week. The notes will be exchanged for new medium-term notes. Deutsche Bank, Gazprombank, JP Morgan and VTB Capital are managing the exchange. The miner's outlook was revise by S&P from negative to stable.
After months of negotiation, Kazakhstan's biggest lenders, Kazkommertsbank and Halyk Bank, have signed a non-binding MoU that would see the former acquire a controlling stake in the latter. Last month, the country's Central Bank authorised a US$655mn loan for Kazkommertsbank in a bid to help recapitalise the struggling lender - one of the regulator's key concerns with the acquisition.
Some good news from Eastern Europe this week. Czech PMI topped forecasts and rose to 57.6, the highest reading since April 2011. Polish PMI edged slightly downward at 54.2, compared with 54.8 a month earlier. Anything above the 50 level is positive.