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The Daily Roundup

Egypt sell’s treasury bills – Philippines appoints new central bank governor – Petroperu is set to issue bonds – India introduces new banking rules – China’s exports grow -Saudi Arabia and Russia might extended oil production cuts

May 8, 2017 // 3:57PM

DAILY ROUNDUP

Middle East & Turkey

The Government of Dubai redeemed in full its US$600mn sukuk due May 2017. The sukuk originally issued in 2012, was part of the Department of Finance's US$5bn Trust Certificate Issuance Programme.

Qatar National Bank issued international bonds worth US$100mn maturing in 2018 with a 2.15% coupon. The notes were sold at a price of 100% and Standard Chartered Bank acted as the sole bookrunner.

Saudi Arabia and Russia signalled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes. In separate statements just on Monday, the world’s largest crude producers said confirmed for the first time they would consider prolonging their output reductions for longer than the six-month extension widely expected to be agreed at the OPEC meeting on May 25.

Saudi Aramco, the world’s largest oil company, has stalled the US$20mn loan to Zambia, because there is no guarantee that money will be repaid due unstable political environment, local media reported. Zambia has not yet secured the loan because the guarantee has not been given by the Bank of Zambia and Ministry of Finance.

Iran is struggling to attract necessary amount of foreign capital as it continues its efforts to once again become a presence on global capital markets, following years of exile due to US-led sanctions. Last year Iran cemented a landmark nuclear agreement with six world powers that was expected to ease the sanctions regime and Hassan Rouhani, the country’s reformist president, said it would aim to attract at least US$30bn a year of foreign investment. Last year 400,000 business visitors and 300 delegations of foreign investors visited the country, according to Farid Dehdilani, international affairs adviser at Iran’s privatisation organisation, quoted by the FT. However, he admitted that despite these visits the country attracted only US$3.6bn of foreign investment in 2016.

Africa

Nigeria's central bank plans to offer US$100mn in forwards at an auction to improve liquidity on the currency markets but did not disclose the settlement period, Reuters reported.

Egypt is looking to secure the second tranche of an IMF funding programme in June, the country's Finance Minister Amr El-Garhy told reporters Sunday. An IMF team is currently conducting a review of the country's progress and will decide on the exact timing of the US$1.25bn tranche's disbursement imminently. The news comes as the country currently mulls whether to issue another Eurobond in the coming weeks, off the back of its successful US$4bn issuance earlier this year.

Egypt's parliament on Sunday passed a long-delayed investment law to improve the business environment in Egypt and to create incentives it hopes will bring back investors' dollars after years of turmoil. The new law is expected to help draw much needed investment by cutting down bureaucracy and providing more incentives to investors looking to put money in Egypt

Egypt sold US$1.2bn worth of one-year treasury bills denominated in U.S. dollars to local and foreign financial institutions with a yield of 3.488%, the central bank announced. The minimum yield was 3.44% and the maximum yield was 3.489%, the lender said in a statement.

Rawbank Sarl, the Democratic Republic of Congo’s biggest lender, plans to extend its branch network into all 26 provinces from 12 over the next three years before expanding regionally and eventually listing its shares. While Rawbank has branches in about 26 towns, it still has no presence in vast parts of Africa’s 2nd largest country.

 

Asia

The Indian government has introduced new banking rules aimed at resolving the country's growing non-performing asset crisis. The first allows the central government to ask the RBI to initiate an insolvency resolution process against a borrower who has defaulted on repayments, and the second lets banks dealing with distressed assets appoint a committee stacked with members handpicked by regulators to help advise on resolution of distressed assets.

India's Finance Minister Arun Jaitley has criticised the Asian Development Bank (ADB) for taking too long to approve and disburse funds. Speaking at a business session of the ADB Board of Governors, Jaitley said the bank also needs to prioritise new sectors that contribute to the multilateral's development objectives - renewable energy in particular.

India's Central Bank will move to adopt a more stringent inflation target in a bid to clamp down on price rises. The change, the result of last year's amendments to the Reserve Bank of India (RBI) Act pushed by Urjit Patel, the inflation hawk now heading the RBI, will see the Bank target 4% specifically, instead of a previous range of 2-6%. The move was met with mixed reviews, with some analysts arguing the move would make the Bank too rigid.

A power transmission and distribution project in India's Andhra Pradesh state secured a US$160mn loan from the Asian Infrastructure Investment Bank (AIIB), the first time the Beijing-based lender has backed a project in India. The AIIB is co-financing the project alongside the World Bank.

Nestor Espenilla was named as the next central bank governor of The Philippines, a promotion that signals a smooth transition from a widely-respected incumbent who for years kept the country’s strong growth and low inflation. The announcement comes ahead of a policy meeting on Thursday, and ends months of speculation about what could be the most important appointment of Rodrigo Duterte's presidency. The 58-year-old Espenilla, the deputy governor in charge of banking supervision, will replace the much-praised career central banker Amando Tetangco, who steps down in July as Bangko Sentral ng Pilipinas (BSP) chief after 12 years, having served a maximum of two terms.

Chinese leasing holding company CM International Financial Leasing Investment Holding priced a US$100mn bond in international markets Friday evening. The notes were priced at par to yield 4.4%. Haitong International securities was sole bookrunner on the trade.

Chinese exports grew a mere 8% year on year in dollar terms in April, slowing from a 16.4% rise in March, according to China’s General Administration of Customs. That still compares favourably to an annual fall of almost 2% in 2016, but was below a median estimate of 10.4% growth predicted by economists questioned by Reuters.

Chinese insurance company, Ping An Insurance issued international bonds for HKD1.5bn maturing in 2022 with a 3.8% coupon. Notes were sold at a price of 100% and China Silk Road International Capital, Haitong International securities, Ping An Bank managed the transaction.

 

Americas

Peru's Ministry of Finance has signed off on Petroperu's plans to raise up to US$2bn through the sale of bonds in international markets. The authorisation will see the state-backed oil firm pare back its initial borrowing target of US$3bn, which was approved by the company's board of directors in March.

Brazilian electricity distributor Light Energia S.A. launched a BRL150mn (approx. US$47mn) debenture this week. The notes mature in September 2018. The sale is being led by Banco Santander.

Brazil's CCR Metro Bahia plans to raise BRL250mn (approx. US$78mn) through the sale of simple non-convertible debentures. The notes will mature in 2020. Banco Santander is leading the sale.

Brazilian fleet solutions provider Localiza Fleet S.A. will raise BRL500mn (approx. US$156mn) through the sale of local bonds. Sale of the notes maturing 2023 is being coordinated by Banco Itau BBA.

Russia, CIS and Europe

Despite weak growth potential, French President Emmanuel Macron's victory in the French election was a credit positive for France, and his centrist policy positions have positive implications for the rest of Europe, according to a Moody's note. "The ability of France's policymakers to design, and successfully implement, policies which enhance growth and support fiscal consolidation over time will drive the trajectory of France's rating and outlook over the medium-term," said Sarah Carlson, a Moody's Senior Vice President and co-author of the report. Currencies across Central Eastern Europe all firmed on Monday trading in the wake of the result, save the Hungarian forint. However, the euro actually fell against the US dollar and the British pound as large speculative bets were unwound following the results.

Moscow continues its efforts to overturn a freeze on lending imposed by the European Bank for Reconstruction and Development (EBRD) following the annexation of Crimea. The discussions are set to continue at its annual meeting this week, with Maxim Oreshkin, Russia’s economy minister, demanding that governors of the pan-European lender lift the ban, arguing that it contradicts the bank’s own rules.

Russia's Gazprom announced on Sunday that construction had begun on the first stage of the Turkish Stream pipeline. The natural gas pipe will run from southern Russia across the Black Sea to Turkey, allowing the state-owned company to send gas direct to southern Europe while circumventing Ukraine. Gazprom said Swiss contractor Allseas Group S.A. started laying pipes on the Russian shore of Black Sea, adding the project is expected to be finished by the end of 2019.

Russia’s state run RusHydro is preparing to collect offers for arranging a Eurobond issue and legal coverage, Russia’s Interfax agency reported on Monday, with the placement expected to happed in September – October 2017. The final date of collecting bids from lead managers was set at 16 May, with results of the tender set to arrive by June 6.

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