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The Daily Roundup

UAE banks look healthy in run-up to Basel III – Saudi Arabia plans local sukuk – Akbank places fresh bonds – Royal Bafokeng Platinum to issue convertible loans – Etisalat Nigeria in loan restructuring talks – Cameroon in talks with IMF over two-year programme – Petroperu to raise US$3bn from international markets – Brazil reveals more details on Crescer PPP programme – PBOC to tighten capital adequacy rules – Central Bank of India issues Tier II notes

Mar 9, 2017 // 6:35PM


Middle East & Turkey

UAE banks are mostly well placed to meet new local capital requirements related to the global Basel III regulatory framework given their strong levels of Tier 1 capital, Fitch said in a recently published note. "Most banks in the UAE and across the Gulf Cooperation Council (GCC) region are capitalised well above the new minimum regulatory requirements and will also comfortably meet the 3% leverage ratio required under Basel III," the rating agency said.

Saudi Arabia is planning to sell a sukuk denominated in riyals and aimed largely at domestic investors, according to a report from Bloomberg. The move, which has been rumoured for some time, will see the oil exporter raise at least part of the SAR70bn it hopes to borrow from domestic markets in 2017 as it looks to plug a wide deficit accrued during times of depressed oil prices.

Omani petrochemicals firm Salalah Methanol Co. is said to be in talks with banks over a 12-year US$720mn syndicated loan, the proceeds of which would be used to refinance existing maturities and help finance the construction of a new ammonia production facility. Bank Dhofar and Standard Chartered are advising the company on the loan, according to multiple reports.

Akbank placed US$250mn in 10-year notes with a coupon of MS+5.026% this week. The bonds were sold at par. Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Societe Generale, Standard Chartered Bank managed the trade.

Turkey's Capital Markets Board has made a number of changes to the country's guidelines on issuing debt instruments, including amendments aimed at making a stronger legal distinction between local and cross-border issuances, and an amendment to increase the minimum threshold on the size of a private placement to TRY100,000. The reforms will also allow issuers to repurchase their notes; previously, only banks could repurchase their bonds.

Turkish Central Bank Governor Murat Cetinkaya did not rule out taking further tightening action when bank officials meet next week to deliberate on moves aimed at smoothing out some of the volatility the lira has experienced over the past couple of months.



South African platinum miner Royal Bafokeng Platinum Ltd., a subsidiary of Royal Bafokeng Holdings, will issue up to ZAR1.2bn (approx. US$93mn) in convertible bonds to finance production increases at its main Styldrift mine, the company said this week. The notes maturing in 2020 are expected to carry a 7% coupon. Morgan Stanley and Rand Merchant Bank are managing the sale.

Etisalat's Nigerian subsidiary is currently in talks with lenders over a US$1.2bn term loan taken out in 2013, according to multiple sources. The telco is currently trying to renegotiate the terms of the loan after it missed a repayment earlier this year, as the struggling economy weighed heavily on its earnings.

Nigeria has finally published its long-anticipated reform programme, which the country needs in order to continue securing funding from the World Bank. The plan focuses on a number of areas including asset divestment, particularly in oil and gas, and infrastructure investment, where it hopes to spend about 30% of its budget. Interestingly, the government hasn't offer much new by way of foreign exchange liberalisation - which will likely be a disappointment to investors and analysts.

Cameroon is currently in talks with the IMF and may sign up to a two-year programme aimed at optimising its funding and investment strategy and boosting growth in the country, the multilateral lender said this week. The two-year programme, which would run from 2017-2019, would help the company address some of its economic challenges - largely brought about by a drop in commodity prices and the price of oil. The IMF is also reportedly in talks with Gabon over a similar programme.



Brazil has finally revealed some details associated with the country's BRL45bn (US$14.5bn) infrastructure PPP programme, also known as the Crescer Project. The government has earmarked over 55 projects including water and sanitation, road transport, and local airports, as well as energy infrastructure. It recently announced the inclusion of 35 transmission line projects, and plans to hold new auctions in May for oil and gas fields, which could also qualify to receive funding under the Crescer Project.

Brazilian industrial output fell 1.4% in January, according to official statistics. The drop was lower than expected, with improved investor sentiment and a recovery in the commodities-driven sectors giving a much-needed boost to output.

Petroperu will look to raise up to US$3bn in international bond markets this year, the company confirmed in a note to regulators this week. The company is looking to finance a series of infrastructure upgrades at its main Talafa refinery.

Latin American corporate credits show some signs of stabilization, notably in Argentina and Peru, while challenges remain for Brazil, Chile, Colombia and Mexico, according to a new Fitch Ratings report. "Downgrades are expected to continue to outpace upgrades in 2017 for Brazilian corporates, though at a lower ratio compared to 2016. Negative rating actions should be mainly driven by potential sovereign downgrades or increasing refinancing risks as a result of credit constraints. Fifty-one percent of Fitch's Brazilian corporate international rating portfolio has been assigned a Negative Outlook, while 2 percent has a Positive Outlook," it said.



The People's Bank of China (PBOC) plans to tighten capital adequacy requirements by scrapping an intermediate category in its Macro Prudential Assessment (MPA) framework for supervising commercial banks during the current quarter, according to Reuters. The PBOC plans to remove an intermedia tolerance indicator, making capital adequacy measurements stricter for the country's banks.

Distressed debt manager China Huarong Asset Management Co Ltd will look to establish up to five government-backed local asset management companies in China, according to Reuters. The move is aimed at reducing the number of distressed loans concentrated with the 'Big Four' asset management companies - including China Huarong - that were set up to absorb and manage state banks' bad debt.

Central Bank of India sold Rs500 crore in Tier II notes at a coupon of 8.62%. The 10-year non-convertible note sale was the latest in a string of Tier II issuances from banks as they look to gear up for Basel III regulations being phased in.


Russia, CIS and Europe

Gazprom has mandated banks to advise on the company's first denominated Eurobond sale in over three years, according to local press reports. Gazprombank, JP Morgan, Mizuho and SMBC are said to be managing the debt sale - which could see the gas giant raise over US$1bn.

Emerging market growth is expected to rise to 4.7% this year, up from just over 4% in 2016, according to Fitch. The rating agency said the forecast was partly based on positive growth dynamics in countries like Russia and Brazil, and modest improvements in China.

Croatia has mandated Citi, HSBC, Morgan Stanley and UniCredit to arrange investor meetings ahead of a planned euro-denominated RegS transaction. The notes are likely to be benchmark size and carry a tenor of 10 years.

Poland’s Central Bank kept the benchmark seven-day interest rate at a historical low of 1.5%, as economists expected. The Central Bank reaffirmed its willingness to continue easing for up to the next year.

The Southern Gas Corridor pipeline company re-tapped its 2026 notes, selling an additional US$1bn at 5.80%, down from initial price talk of 5.875% area.

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