Oil prices dipped on Friday as the market continued to assess how effectively OPEC production cuts are working to absorb a global oversupply. Brent crude was down 10 cents, or 0.19%, at US$51.64 per barrel, as of Friday morning. WTI edged down 3 cents, or 0.06%, at US$48.72 a barrel.
Middle East & Turkey
Qatar International Islamic Bank is looking to issue up to QAR3bn in Tier 1 capital boosting sukuk over the next three years, according to a regulatory disclosure. The bank's board will look to convene a meeting in April to discuss plans for the issuance.
Al Izz Islamic Bank plans to raise up to OMR30mn through a privately placed Tier 1 sukuk, according to Reuters. The bank will meet later this month to discuss the placement.
Oman Investment Fund, the country's sovereign wealth fund, is close to syndicating a US$600mn 5-year loan needed to acquire Oman Telecommunications Co, colloquially known as Omantel, according to a report from Reuters. The transaction is being led by Citi, with Banca IMI, Kuwait Finance House and National Bank of Abu Dhabi joining as lead arrangers.
The Egyptian Government and Kuwait Fund for Arab Economic Development (KFAED) has inked a KDR18.5mn (approx.. US$55mn) loan to help finance the construction of a water desalination plant in the East Port Said.
Central Bank of Kuwait has raised the discount rate in Kuwait by a quarter percentage point to 2.75% from 2.5% effective from 16 March 2017.
Saudi Arabia’s upcoming sukuk issuance is causing some concerns in the market, according to sources close to the deal the confided to Bonds & Loans. According to the contact, some Islamic banks do not approve of the structure that the KSA came up with for the transaction. As the structure is not traditional, it may be rejected by sharia boards of multiple banks in the region, which would in turn lead other sukuks to tighten significantly.
Turkey's Central Bank hiked the interest rate on its "late liquidity window" by 75bp this week as it looks to tighten policy amid rising inflation.
The IFC and the World Bank in addition to the Kenya Bankers Association (KBA) and the Nairobi Securities Exchange (NSE) have pledged support for Kenyan issuers looking to tap into the green bond market. The Kenyan Treasury among others is currently assessing green bonds as one of a number of potential funding instruments to tap into over the next two years. Kenyan banks will be required to identify climate-aligned assets that could be refinanced through green bonds.
Kenya's parliament has called for the country's Central Bank Governor Patrick Njoroge to be investigated in connection with a multi-million-dollar youth employment scam that saw billions of shillings in public funds stolen from the National Youth Service, according to local press reports. A parliamentary committee is weighing whether or not he should be charged with abuse of office for not informing the government of abnormal payment requests.
Nigeria's Debt Management Office (DMO) said it issued more bonds than initially planned at auction after slowing inflation helped pull yields on its treasury bills down. The DMO raised NGN160bn this week, NGN30bn more than initially anticipated. Inflation slowed to 17.8% in February, down from 18.2% the month before.
Nigerian lawmakers are urging the senate to approve plans to issue a further US$500mn in Eurobonds to finance the 2017 budget, after the country successfully placed US$1bn in oversubscribed notes last month. The law up for consideration also leaves open the possibility of further local market borrowing.
Yet another Argentine province has tapped the international markets in 2017. The Province of Santa Fe placed US$250mn in 5-year notes at a 7% coupon. Sale of the notes, which priced at par, was led by Citi, HSBC and JP Morgan.
Venezuelan state oil company PDVSA has offered Russian counterpart Rosneft a stake in a joint venture in the country's Orinoco Belt extra-heavy crude area, Reuters reported citing industry sources. Russia's top oil producer has been offered a 10% stake in the Petropiar joint venture. In which PDVSA has a 70% share, and with the rest owned by U.S. oil company Chevron. It is unclear if Rosneft plans to accept the offer.
Argentina refinanced US$1.5 billion in expiring treasury maturities at nominal annual interest rates between 2.65% and 3.25%, the Finance Ministry said in a statement on Thursday. That accounted for the bulk of the US$1.77bn in treasuries maturing next week, the ministry said, adding that it will cancel the remaining US$266mn. The ministry said it received orders totalling US$3.8bn.
Chile's Central Bank cut the benchmark interest rate 25bp to 3% at its monthly meeting on Thursday, as expected, and indicated additional easing could be required. The decision is in line with a poll of traders released by the Central Bank last week, in which respondents predicted a 25bp cut in March and another similar cut within six months.
Panama's economy is set to grow 5.1% in 2017 according to IMF, which is less than was expected by the local authorities. The Ministry of Finance had announced earlier this year that the economy would grow 5.7% in 2017, however the Central American nation will still be the second growing economy in region.
Brazilian iron ore miner Vale SA said on Thursday that a federal court in Minas Gerais has suspended a case brought by prosecutors seeking BRA155bn (US$49.7bn) in damages for the 2015 Samarco mine disaster. According to the statement, the court suspended other lawsuits to facilitate negotiation of a final deal on damages resulting from the collapse of a tailings dam at the mine - a joint venture between Vale and the world's largest mining company, BHP Billiton Ltd.
Mexico took advantage of relative calm in the markets following the Fed rate hike to price a US$2.4bn 10-year bond. The notes maturing 2027 carry a 4.15% coupon and were priced at 99.676% to yield 4.19%. Barclays, Deutsche Bank, and JP Morgan managed the sale.
Latin American development bank, la Corporacion Andina de Fomento (CAF), priced a CHF160mn trade this week. The notes maturing 2025 carry a coupon of 0.3% and priced at 100.079% to yield 0.29%. Credit Suisse and UBS arranged the sale.
Foreign investment in Chinese bonds rose 53% over the past year. This comes after the Asian country took significant measures to further open their capital markets to foreign investors. According to the Financial Times, this will increase pressure for the inclusion of China’s US$9.3tn bond market in the dominant market indices.
Chinese holco Fosun International successfully issued US$800mn in 5-year notes this week. The notes maturing 2022 carry a 5.25% coupon and were sold at par. AMTD Asset Management Limited, Credit Suisse, Fosun Hani Securities, Haitong International securities, and China Huarong Asset Management led the sale.
In India, the BJP’s electoral wins in the recent assembly polls are a credit positive for the Indian sovereign, which has largely prioritised reform in recent years, according to Moody's. The BJP won a net 294 seats in the five state assembly elections and secured 312 seats in India’s most populous state of Uttar Pradesh, up from just 47 in 2012.
ICICI Bank, India's largest private sector lender by assets, raised Rs3,425 crore in Basel III compliant notes. The privately placed unsecured, unsubordinated notes pay a coupon of 9.20%.
Indonesia’s Central Bank kept its benchmark interest rate unchanged at 4.75% this week as it continues to assess the potential impact of higher US interest rates on inflation and outflows.
Russia, CIS and Europe
The Russian Central Bank estimated that the banking sector liquidity surplous will be between RUR0.6tn and RUR1.2tn by end of 2017. According to the Bank’s report, in 2016 the sector ran up a liquidity deficit, which demanded around RUR700bn worth of exchange operations by the CBR.
Aluminium giant Rusal is set to become Russia’s first issuer of panda-bonds as it prepares to place a CHY1bn (US$144mn) 5.5% yuan-denominated bond on the Shanghai Stock Exchange, with China International Capital Corporation Ltd. selected as organizer.
Gazprom successfully tapped the international debt capital markets this week, placing US$750mn in 10 year notes at a coupon of 4.95%, below IPTs of 5.25%. Sale of the notes, which were sold at par, was led by Gazprombank, JP Morgan, Mizuho Financial Group, and SMBC Nikko Capital.
Poland managed to place €1bn in 10-year notes this week. The notes maturing 2027 carry a 1.375% coupon and were priced at 99.068% to yield 1.48%. Barclays, BNP Paribas, Commerzbank, ING Wholesale Banking London, JP Morgan, and PKO Bank Polski led the sale.
Struggling Croatian food group Agrokor has reportedly secured a €300mn loan from Russia's Sberbank, according to a report in Vecernji List. Analysts suggest the impact of the news won't be known until the company's debt and ownership restructuring plans firm up. The company has about US$6.5bn in liabilities, a significant portion of which comes due in 2018, according to analysts at Schildershoven.