Middle East & Turkey
Saudi Arabia’s credit rating was cut one level by Fitch Ratings, which cited low oil prices impacting public and external finances as the main reason. Fitch reduced Saudi Arabia’s rating to A+, the fifth-highest investment grade, and changed the outlook to stable from negative, the agency said in a statement on Wednesday.
In Beijing, China and Saudi Arabia have inked a series of trade deals worth upwards of US$65bn this week, with the two countries courting investors in one another's flagship initiatives: Saudi Arabia's Vision 2030, and China's One Belt Road initiative. An MoU between Saudi Arabia and state-run China North Industries Group will also include building refinery and chemical projects in China. Saudi Basic Industries Corp (Sabic) and Sinopec have also agreed to develop more petrochemicals projects jointly through their joint venture, Sinopec Sabic Tianjin Petrochemical Co (SSTPC).
Saudi Aramco is planning to issue a US$2bn bond ahead of its IPO, part of a wider debt restructuring plan that could see the company raise as much as US$10bn, according to a report from Bloomberg. Saudi Aramaco reportedly plans to hit the market as early as the second quarter this year, with the oil giant leaning towards a local-market sukuk.
In a follow-up to the bank's debut green bond last year, Turkiye Sinai Kalkinma Bankasi (TSKB) this week hit the market for a US$300mn bond, the country's first Tier II green bond. The notes maturing 2027 priced at par and yield 5YMS+5.544%. Citigroup, HSBC, JP Morgan, Societe Generale, and Standard Chartered Bank managed the sale.
According to the data by StatSA, the South African economy has slowed to 0.3% in 2016 compared to 1.3% the previous year, led largely be declines in the mining and agriculture sectors. Headline consumer inflation slowed to 6.3% year-on-year in February from 6.6% in January. Economists are forecasting a 6.3% year-on-year inflation print after monthly inflation rose to 1.1% from 0.6% previously.
Kenya Banking Association (KBA) and the Mongolian Bankers Association (MBA) signed a MoU this week that will see the two organisations partner to support sustainable finance in their respective jurisdictions. Both countries have launched policy frameworks that provide guiding principles to prospective issuers of green bonds, while the Kenyan treasury is currently exploring whether to issue its own green bond over the next two years.
After over a year of delays, Kenya is to start offering a mobile platform, M-Akiba, that will allow retail investors to buy government bonds, the country's treasury said this week. The country's first mobile bond will go on sale this Thursday, officials confirmed.
Algeria’s state-run energy producer Sonatrach Group plans to boost crude oil output by 14% in the four years to 2019 and invest billions of dollars in exploration projects. Sonatrach expects to invest US$9bn from 2017 to 2021 in its search for new deposits of oil and natural gas, and is putting together plans to drill an average of 100 wells annually over the same five years with up to US$50bn worth of investments in all of its operations during this period, Bloomberg reported citing government sources.
Uganda says it has asked China for a US$500mn loan to help build almost 600 km (360 miles) of roads in the country's oil-rich west, despite concerns that heavy borrowing that has ballooned the country's debt. Uganda has discovered an estimated 6.5 billion barrels of crude reserves on its Albertine rift basin along the border with the Democratic Republic of Congo and the government hopes that Chinese investments will help to finance the development of those fields.
The UK is boosting its export credit support to companies looking to invest in Argentina, International Trade Minister Greg Hands announced this week. The announcement will see UK Export Finance offer up to GBP1bn (approx. US$1.25bn) to support businesses in Argentina.
Argentina's national statistics body reported a 2.1% drop in GDP in the fourth quarter of 2016, despite a 0.5% sequential rise.
Odebrecht Engenharia e Construção (OEC) is set to receive a US$600mn credit line for a number of existing projects from Brazilian state-owned development bank BNDES, according to local press reports. A report in Valor this week suggested the bank is also open to financing new projects being undertaken by Odebrecht, which has been hamstrung by one of the country's biggest scandals in decades.
Odebrecht Ambiental - Manso SA (ODB Manso) is readying a BRL70mn debenture sale, according to a note from Fitch. The notes due 2023 were given a provisional rating of 'A (bra)' by the rating agency.
Brazilian President Michel Temer called Brazil's scandal over the sale of expired meat an "economic embarrassment" this week as the country's beef exporters continue reeling from a series of import restrictions imposed on them. So far, Hong Kong, China, Japan, Mexico, Chile, and the EU have slapped restrictions on beef imported from the South American country. The scandal has prompted the closure of three beef production plants so far, with yields on the bonds of many of the country's beef producers jumping by as much as 15bp since the weekend.
Brazilian TV network operator Globo hit the market this week to price a US$200mn trade. The notes maturing in 2027 were priced at par to yield 5.125%. Bank of America Merrill Lynch, Itau Unibanco Holdings, and Banco Santander managed the sale.
Brazilian energy firm Raizen Energia SA is preparing a BRL750mn debenture later this month, according to a prospectus seen by Bonds & Loans. The company plans to split the issuance between two tranches maturing in 2023 and 2024. The sale is being coordinated by BB Investimentos, Bradesco BBI, Itau BBA, Safra, and XP Investimentos.
Mexico's Nacional Financiera (Nafin) is reading its debut yen-denominated deal which could price as early as Thursday. A final volume for the bond has not been confirmed.
An Indonesian financier has borrowed US$200mn from the Asian Infrastructure Investment Bank (AIIB) and the World Bank. PT Sarana Multi Infrastruktur (SMI) will on-lend the finance to infrastructure projects in Indonesia, with sectors like transportation, housing, health facilities and education earmarked as investment priorities. The agreement followed AIIB and World Bank’s US$125mn loans in February to upgrade the country’s network of dams and January’s US$216.5mn investment in improving slums in Indonesia’s urban centres.
In India, a newly published study produced by Assocham and Crisil has forwarded a series of proposals aimed at boosting institutional and retail investor participation in the corporate bond market. The study proposed setting up a dedicated team of experts within the Ministry of Finance to support the development of the corporate bond market, and incentivising retail investors to put capital towards fixed income products, as two strategies that could help bolster the market's development and reduce reliance on bank lending.
South Korean lender Shinhan Bank issued US$500mn in international markets this week. The bank priced the notes at 99.575% to yield 2.98%. Credit Agricole CIB, HSBC, JP Morgan, Mizuho Financial Group, Morgan Stanley, and Shinhan Bank managed the sale.
Russia, CIS and Europe
S&P has revised the outlook to 'positive' on a number of Russian corporates following its outlook upgrade on the sovereign. Gazprom PJSC, Gazprom Neft PJSC, LUKOIL PJSC, Rosneft OJSC, Mobile TeleSystems PJSC, and Russian Railways JSC all saw their rating outlooks upgraded by the rating agency.
Around 30 investors took part in a deal to place Russian oil giant Transneft’s RUB20bn 4-year exchange bonds, PRIME agency reported on Tuesday. Investment and management companies bought around 20–25% of the issue, while the remainder was purchased by banks, the agency’s sources stated. The company placed the bonds at a coupon rate of 9% annually, which corresponds to a 9.2% annual yield to maturity.
Russian gas giant Gazprom will hold a road show for British pound-denominated Eurobonds in London and Edinburgh from March 27, with Deutsche Bank, Gazprombank, J.P. Morgan and VTB Capital acting as organizers. Earlier in this month Gazprom placed US$750mn 10-year Eurobonds at 4.95%.
Russian Economy Minister Maxim Oreshkin criticized the new methodology used by the Russian statistics agency. Economic data for February published on Tuesday by Russia's official statistics service Rosstat is not representative and data for January and February could be significantly revised, Oreshkin insisted. The Minister said the recent switch by the service to a new methodology had been poorly handled and noted that publication dates for official data had been often moved.
Pound Sterling fell to a six-day low versus the euro on Wednesday after a terrorist incident took place in the capital’s Westminster. Police said they were called to a firearms and car crash incident on Westminster Bridge near parliament, during which 2 people died and at least 12 injured. Sterling fell to US$1.2424, down from around US$1.2451.
Agrokor is reportedly in discussions with Chinese lenders to acquire a portion of its business, according to reports in Nacional, a Zagreb-based publication. The company is reportedly in talks with ICBC on potentially acquiring up to half of Croatian Company, which is owned by Agrokor.