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The Daily Roundup

Doha Bank looks to raise fresh capital – Bank Muscat signs US$525mn loan – Tanzania drops benchmark rate by 4% - Nigeria mulls follow-on Eurobond to sop up excess demand – drought threatens Kenyan economy – Argentine debt outlook upgraded – Banxico sees success with hedging tactics – China FX reserves break eight-month slide – Citigroup to add local currency China gov debt to indices – Rushydro, VTB agree recapitalisation plan

Mar 7, 2017 // 6:36PM

Middle East & Turkey

Doha Bank is looking to increase its core capital by QAR3.1bn, which it plans to raise by issuing new shares, according to a note posted on the Qatar Stock Exchange website.

Bahrain Commercial Facilities Co is currently mulling a BHD20mn bond (approx. US$53mn), according to a circular from the company's board of directors.

Oman's largest lender, Bank Muscat, has reportedly finalised a US$525mn loan coordinated by Bank ABC and National Bank of Abu Dhabi, according to Reuters. The news agency said the 3-year loan was sold with an al-in spread of LIBOR+170bp.

 

Africa

Tanzania's Central Bank significantly reduced its benchmark discount rate from 16% to 12% in a bid to spur lending. The cut follows a steep drop in private sector lending, according to a statement from the Central Bank.

The Central Bank of Nigeria (CBN) has concluded plans to raise NGN1.129tn through an auction of treasury bills in the second quarter of 2017. The notes will carry rolling maturities of 91, 182 and 364-days, it said in a recent circular.

Nigeria is said to be mulling a fresh bond as a follow on from its US$1bn Eurobond issued last month. The sovereign could look to raise another US$500mn from global investors after seeing more than US$8bn in demand for its last issuance, sources close to the matter said.

Drought continues to be one of the biggest risks facing the Kenyan economy in 2017, the country's Central Bank Governor Patrick Njoroge told Bonds & Loans. In February alone food prices grew 16.5% on average, with the cost of some agriproducts doubling, as the drought continues to weight on the country's farmers and the wider economy.

South Africa's GDP declined 0.3% in the fourth quarter of 2016, new government statistics show. Poor performance and work stoppages in the mining sector weighed on growth, data from Statistics South Africa show. The economy grew just 0.3% last year, below analyst expectations and down from 1.5% the previous year.

 

Americas

Moody's upgraded its outlook on Argentine sovereign debt from 'stable' to 'positive' this week, with the rating agency citing improved economic prospects and lower inflation boosting real wage growth and consumption. The sovereign along with a growing number of Argentine corporates and provinces have been among the region's largest and most frequent issuers over the past year. "The overall debt level of 53% of GDP is comparable to peers and most of the government debt is to either to multilaterals or is intra-public sector debt (mainly to the social security administration and to the central bank). Debt owed to the private sector remains below 20% of GDP and foreign currency debt owed to the private sector below 15% of GDP," the rating agency said.

The Central Bank of Mexico intervened to stem the slide of the peso Monday, with limited success. Banxico sold US$1bn of new peso hedging instruments similar to non-deliverable forwards. Total demand for the new instruments was US$2.075bn, according to the bank. But the effectiveness of the hedge had already seemed to be wearing off in early morning trading Tuesday, falling 0.2% against the dollar.

Brazil, Latin America´s largest economy, shrank 3.6% in 2016 as high inflation, a large budget deficit and political turmoil has hindered the country’s recovery. The contraction was felt across almost all economic sectors from industry to services, and was slightly worse than estimated though marginally better than 2015, when gross domestic product contracted 3.8%.

Brazilian corporates soaked up nearly US$15bn in loans from Chinese lenders in 2016, according to figures published by El País Brasil. The data also suggest Brazil is the second largest debtor to Chinese lenders, bested only by Venezuela.

Brazil's Banco Safra is said to be mulling an international bond sale that could net the private bank between US$300mn and US$500mn, sources said.

Chile's economy grew just 1.5% last year, the slowest pace in over 7 years. Growth was down about 0.8% from full year 2015 figures, according to the country's national statistics body.

 

Asia

The People' s Bank of China (PBOC) has lent CNY194bn (approx. US$28.12bn) to 12 institutions through its medium-term lending facility, it said in a social media post this week. The figure is down slightly from January, when it lent CNY245.5bn to 22 Chinese financial institutions.

China’s foreign exchange reserves rose this month and broke an eight-month string of declines. Reserves rose by US$6.9bn to reach US$3.01tn at the end of February, the PBOC announced. China’s currency had weakened by an unprecedented 6.5% against the dollar last year amid record capital outflows. To address this, the PBOC sold dollars from its reserves to relieve pressure on the currency, making their reserves drop to a five-year low in January.

China SCE Property will issue US$200mn in bonds this week, the company said. Proceeds from the 5.875% senior notes due 2022 will go towards refinancing existing maturities.

Chinese lender ICBC this week launched a US$650mn bond maturing 2020. The notes were priced at 99.072% to yield 2.68%. The Agricultural Bank of China, Bank of China, China Construction Bank, Haitong International securities, HSBC, ICBC, Mizuho Financial Group, and UBS managed the sale.

Citigroup said this week it plans to include onshore Chinese government bonds in its emerging markets and regional indices, just weeks after a similar move from Bloomberg and Barclays. The move is likely to help boost foreign exposure to the country's booming onshore bond market, which is currently the third largest in the world.

Taiwan registered a trade surplus of US$3.36bn in February, the Ministry of Finance said this week. The results were impressive given the typical seasonal lull observed around the lunar new year.

Pakistan is currently working towards making its National Savings Scheme (NSS) sharia-compliant, a move that will enable depositors to directly invest in ijara sukuk issued by the government. Organisers of the government-run saving scheme are currently in the stages of determining pricing and duration on the Islamic instruments that will be invested into.

India's DCB Bank plans to raise up to INR4bn through the sale of new shares, the bank's board of directors decided following meetings late last week. The bank may also look to issue fresh bonds as part of the fundraising effort, though no plans have been confirmed as yet.

 

Russia, CIS and Europe

Rushydro and VTB have struck and agreement that will see the two recapitalise Rushydro by RUB55bn (approx. US$945mn) through the sale of new treasury shares. The company will sell RUB15bn in shares to VTB directly, giving it roughly 13% ownership of the company.

Hungary's Deputy Governor Marton Nagy said the country's commercial banks should cut mortgage rates in an effort to ease the credit burden on households. Mortgage rates have remained fairly high despite record low interest rates, currently 0.9%. Nagy said the government would soon commence talks with the country's commercial lenders aimed at reducing the cost of housing credit.

PKO Bank Hipoteczny plans to issue new covered bonds backed by a portfolio of zloty-denominated mortgages, the bank announced this week. The bond will likely be a benchmark-sized issuance, it said. PKO Bank last issued a euro-denominated covered bond in October last year, pricing a €500mn 5-year trade at par to yield 0.178%.

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April / June 2020

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