mashreq Fixed Income Trading Daily Market Update Tuesday, January 19, 2015 Page 1 Market Update Saudi oil exports climb to seven-month high as refineries return Saudi Arabia, the world’s largest crude exporter, shipped the most oil in seven months in November in a sign that overseas refineries were getting prepared to put plants back on line after seasonal maintenance. Saudi shipments rose to 7.72 million barrels a day, the highest since April, from 7.364 million in October, according to data on the website of the Joint Organisations Data Initiative based in Riyadh. JODI is an industry group supervised by the Riyadh-based International Energy Forum. Refineries are usually taken off line for repairs in September and October. Refined products exports from Saudi Arabia rose in November, to 1.18 million barrels a day from 1.09 million, according to JODI. The global oil surplus will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, the International Energy Agency said last month. (Bloomberg) EDB: Bahrain non-oil sector grows 4.2% in 9M2015 According to the latest Bahrain Economic Quarterly (BEQ) issued by the Economic Development Board (EDB), Bahrain’s non-oil growth in 3Q2015 reached 3.3%, with growth in 9M2015 as a whole reaching 4.2%. Overall growth in the economy reached 2.4% in the 3Q2015 and 3% during January-September 2015 as a whole. Growth was driven by the continued resilience of the non-oil sector. This performance was underpinned by robust performance across a number of sectors. In particular, the report revealed that the hotels & restaurants, and the social & personal services sectors were among the key drivers of growth within the non-oil economy for 3Q2015, with a YoY growth rate of around 8% and 6.3%, respectively. The BEQ also highlighted expectations of further growth in key sectors such as infrastructure, with nearly USD 6billion worth of projects allocated, USD 3.7billion tendered, and USD 1.3billion commenced to date. This will have a positive impact on the construction sector in the upcoming years. In the banking sector, bank credit continued to grow at a brisk pace with total bank credit increasing by 7% as of 3Q2015-end. (GulfBase.com) MEED: Value of GCC project contract awards to drop 15% in 2016 According to a report by MEED, the value of construction contracts due to be awarded in 2016 would drop by 15% as government spending plans in the GCC are hit by low oil prices. The value of projects is likely to decline to USD 140billion in 2016, as compared to USD 165billion in 2015. Saudi Arabia would be one of the hardest-hit markets, with new contract awards may drop by almost 20%, or about USD 10billion, to USD 40.7billion. Contract awards in Qatar may fall by 24% to USD 22.2billion and Kuwait by 23% to USD 24.3billion from an all-time high of USD 31.5billion in 2015. Meanwhile, the UAE would experience a drop of only 2.4%, or USD 900mn, in contract awards to USD 36.5billion from USD 37.4billion. MEED said that the market would be buoyed by continued spending on real estate and infrastructure in Dubai, and by long-term strategic spending on oil & gas projects in Abu Dhabi. (GulfBase.com) Saudi Arabia's Kingdom Holding closes refinancing of EUR 350 million loan Saudi Arabia's Kingdom Holding , the investment firm of billionaire Prince Alwaleed bin Talal, has completed the refinancing of a EUR 350 million (USD 381.3 million) loan facility, it said on Monday. The loan, backed by the Four Season Hotel George V, was extended by a consortium of three banks, Kingdom Holding said in an emailed statement. Credit Agricole Corporate and Investment Bank, Natixis Pfandbriefbank and Societe Generale Corporate and Investment Banking acted as co-lead arrangers, the statement said, while Credit Agricole acted as facility and security agent. (Reuters) Abu Dhabi inflation up 0.4% in December Abu Dhabi inflation was up 0.4% in December 2015 compared to November, according to a report from Statistics Centre Abu Dhabi on Monday. This reflects the net outcome of the rises and falls in the price of the goods and services of the consumer basket and during the aforesaid period. The rise last month was mainly due to increase in prices of hotels and restaurants (up 3.8% month-on-month) and housing, water, electricity, gas and other fuels (up 1.6% month-on-month). (Reuters) Kuwait inflation expected to average 3.3% in 2015 Inflation in consumer prices came marginally lower in November, easing from 3.2% year-on-year (y/y) in October to 3.1% y/y, as inflation in most components was either unchanged or remained steady. Core inflation (which excludes food inflation) also eased slightly, from 2.9% y/y to 2.8% during the same period. Subsequently, annual headline inflation is on track to average close to 3.3% in 2015, slightly higher than the 3% annual average in 2014. Inflation in local food prices was unchanged at 4.3% y/y in November; global food prices remained in decline. (Reuters) Aldar buys Daman House in Abu Dhabi Aldar has acquired Daman House, a commercial office building in Capital Centre Abu Dhabi. Daman House comprises 23,000 sqm GLA of Grade A commercial space, fully leased on a long-term contract to a single government related entity. The transaction underscores Aldar ’s ambition to grow its recurring revenue portfolio through investment in new and existing revenue producing assets. The purchase of Daman House is the first to be made as part of an AED3 billion investment programme that Aldar is implementing to drive growth within its recurring revenue business to achieve its new target of 2.2 billion dirhams Net Operating Income (NOI) by 2020. The Company has already committed approximately 900 million dirhams of investment, representing almost 30% of this programme, through the Daman House transaction, the forthcoming extension of Al Jimi Mall in Al Ain and the expansion within Aldar Acadamies through the construction of the Al Mamoura School in Abu Dhabi, announced in November 2015. The 410 million dirham extension of Al Jimi Mall will bring an additional 33,000 sqm GLA of retail space to the existing 43,000 sqm GLA trading space as well as a renovation and face lift of the existing mall. (Bloomberg/Reuters) Dubai landlord sees budget rethinks as ‘Tough’ period hits plans Hesham Al Qassim, chief executive officer of the state’s Wasl Asset Management, Dubai’s biggest landlord has stated that companies need to be “more agile to sustain their businesses and survive the tough period ahead,”. Those who are mindful of the reality around them will manage, but those who stretch themselves with billions worth of projects won’t.” Dubai’s property market was buffeted last year by falling oil prices, rising political tension in the region and slowing economic growth from China to Brazil, all trends that are set to continue in 2016. Real estate developers, whose projects can take two to four years to build, may see their markets change several times over that period. Wasl, which collects rent from around 35,000 households and holds offices, hotels and golf courses across Dubai, is developing thousands of middle-income homes, a market that’s experiencing a severe shortage. Al Qassim said he reviews the company’s plans often, shelving some and delaying or altering others to better respond to fast-changing demand and market sentiment. (Bloomberg) Shell to exit major Abu Dhabi gas field project Royal Dutch Shell said on Monday it had decided to exit the multi-billion dollar plan to jointly develop the Bab sour gas field in Abu Dhabi, citing the downturn in the oil market. The Anglo-Dutch company said that "following a careful and thorough evaluation of technical challenges and costs" it will stop further joint work on the project with the Abu Dhabi National Oil Co. (ADNOC). Shell won in 2013 a tender that was valued at the time at USD 10 billion to develop over a 30-year venture the complex sour gas field that involves treating potentially deadly gasses. The joint venture was also seen at the time as a stepping stone for Shell to renew a coveted concession to develop the United Arab Emirates' largest onshore oil field. The Bab sour joint venture envisaged the construction of a 1 billion cubic feet sour gas processing plant for domestic market consumption. "The evaluation concluded that for Shell, the development of the project does not fit with the company's strategy, particularly in the economic climate prevailing in the energy industry," Shell said in a statement on Monday. ADNOC was expected to hold 60% of the Bab sour gas project, while Shell would have held 40%. (Reuters)
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mashreq Fixed Income Trading
Daily Market Update Tuesday, January 19, 2015
Page 1
Market Update
Saudi oil exports climb to seven-month high as refineries return
Saudi Arabia, the world’s largest crude exporter, shipped the most oil in seven months in November in a sign that overseas refineries were getting
prepared to put plants back on line after seasonal maintenance. Saudi shipments rose to 7.72 million barrels a day, the highest since April, from 7.364
million in October, according to data on the website of the Joint Organisations Data Initiative based in Riyadh. JODI is an industry group supervised by the
Riyadh-based International Energy Forum. Refineries are usually taken off line for repairs in September and October. Refined products exports from Saudi
Arabia rose in November, to 1.18 million barrels a day from 1.09 million, according to JODI. The global oil surplus will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, the International Energy Agency said last month. (Bloomberg)
EDB: Bahrain non-oil sector grows 4.2% in 9M2015 According to the latest Bahrain Economic Quarterly (BEQ) issued by the Economic Development Board (EDB), Bahrain ’s non-oil growth in 3Q2015 reached
3.3%, with growth in 9M2015 as a whole reaching 4.2%. Overall growth in the economy reached 2.4% in the 3Q2015 and 3% during January-September
2015 as a whole. Growth was driven by the continued resilience of the non-oil sector. This performance was underpinned by robust performance across a
number of sectors. In particular, the report revealed that the hotels & restaurants, and the social & personal services sectors were among the key drivers
of growth within the non-oil economy for 3Q2015, with a YoY growth rate of around 8% and 6.3%, respectively. The BEQ also highlighted expectations of
further growth in key sectors such as infrastructure, with nearly USD 6billion worth of projects allocated, USD 3.7billion tendered, and USD 1.3billion
commenced to date. This will have a positive impact on the construction sector in the upcoming years. In the banking sector, bank credit continued to grow
at a brisk pace with total bank credit increasing by 7% as of 3Q2015-end. (GulfBase.com)
MEED: Value of GCC project contract awards to drop 15% in 2016 According to a report by MEED, the value of construction contracts due to be awarded in 2016 would drop by 15% as government spending plans in the
GCC are hit by low oil prices. The value of projects is likely to decline to USD 140billion in 2016, as compared to USD 165billion in 2015. Saudi Arabia
would be one of the hardest-hit markets, with new contract awards may drop by almost 20%, or about USD 10billion, to USD 40.7billion. Contract awards
in Qatar may fall by 24% to USD 22.2billion and Kuwait by 23% to USD 24.3billion from an all-time high of USD 31.5billion in 2015. Meanwhile, the UAE
would experience a drop of only 2.4%, or USD 900mn, in contract awards to USD 36.5billion from USD 37.4billion. MEED said that the market would be
buoyed by continued spending on real estate and infrastructure in Dubai, and by long-term strategic spending on oil & gas projects in Abu Dhabi.
(GulfBase.com)
Saudi Arabia's Kingdom Holding closes refinancing of EUR 350 million loan
Saudi Arabia's Kingdom Holding , the investment firm of billionaire Prince Alwaleed bin Talal, has completed the refinancing of a EUR 350 million (USD
381.3 million) loan facility, it said on Monday. The loan, backed by the Four Season Hotel George V, was extended by a consortium of three banks,
Kingdom Holding said in an emailed statement. Credit Agricole Corporate and Investment Bank, Natixis Pfandbriefbank and Societe Generale Corporate and Investment Banking acted as co-lead arrangers, the statement said, while Credit Agricole acted as facility and security agent. (Reuters)
Abu Dhabi inflation up 0.4% in December
Abu Dhabi inflation was up 0.4% in December 2015 compared to November, according to a report from Statistics Centre Abu Dhabi on Monday. This
reflects the net outcome of the rises and falls in the price of the goods and services of the consumer basket and during the aforesaid period. The rise last
month was mainly due to increase in prices of hotels and restaurants (up 3.8% month-on-month) and housing, water, electricity, gas and other fuels (up 1.6% month-on-month). (Reuters)
Kuwait inflation expected to average 3.3% in 2015
Inflation in consumer prices came marginally lower in November, easing from 3.2% year-on-year (y/y) in October to 3.1% y/y, as inflation in most
components was either unchanged or remained steady. Core inflation (which excludes food inflation) also eased slightly, from 2.9% y/y to 2.8% during the
same period. Subsequently, annual headline inflation is on track to average close to 3.3% in 2015, slightly higher than the 3% annual average in 2014. Inflation in local food prices was unchanged at 4.3% y/y in November; global food prices remained in decline. (Reuters)
Aldar buys Daman House in Abu Dhabi
Aldar has acquired Daman House, a commercial office building in Capital Centre Abu Dhabi. Daman House comprises 23,000 sqm GLA of Grade A
commercial space, fully leased on a long-term contract to a single government related entity. The transaction underscores Aldar ’s ambition to grow its
recurring revenue portfolio through investment in new and existing revenue producing assets. The purchase of Daman House is the first to be made as part
of an AED3 billion investment programme that Aldar is implementing to drive growth within its recurring revenue business to achieve its new target of 2.2
billion dirhams Net Operating Income (NOI) by 2020. The Company has already committed approximately 900 million dirhams of investment, representing
almost 30% of this programme, through the Daman House transaction, the forthcoming extension of Al Jimi Mall in Al Ain and the expansion within Aldar
Acadamies through the construction of the Al Mamoura School in Abu Dhabi, announced in November 2015. The 410 million dirham extension of Al Jimi Mall will bring an additional 33,000 sqm GLA of retail space to the existing 43,000 sqm GLA trading space as well as a renovation and face lift of the
existing mall. (Bloomberg/Reuters)
Dubai landlord sees budget rethinks as ‘Tough’ period hits plans
Hesham Al Qassim, chief executive officer of the state’s Wasl Asset Management, Dubai’s biggest landlord has stated that companies need to be “more
agile to sustain their businesses and survive the tough period ahead,”. Those who are mindful of the reality around them will manage, but those who
stretch themselves with billions worth of projects won’t.” Dubai’s property market was buffeted last year by falling oil prices, rising political tension in the
region and slowing economic growth from China to Brazil, all trends that are set to continue in 2016. Real estate developers, whose projects can take two
to four years to build, may see their markets change several times over that period. Wasl, which collects rent from around 35,000 households and holds
offices, hotels and golf courses across Dubai, is developing thousands of middle-income homes, a market that’s experiencing a severe shortage. Al Qassim
said he reviews the company’s plans often, shelving some and delaying or altering others to better respond to fast-changing demand and market
sentiment. (Bloomberg)
Shell to exit major Abu Dhabi gas field project
Royal Dutch Shell said on Monday it had decided to exit the multi-billion dollar plan to jointly develop the Bab sour gas field in Abu Dhabi, citing the
downturn in the oil market. The Anglo-Dutch company said that "following a careful and thorough evaluation of technical challenges and costs" it will stop further joint work on the project with the Abu Dhabi National Oil Co. (ADNOC). Shell won in 2013 a tender that was valued at the time at USD 10 billion to
develop over a 30-year venture the complex sour gas field that involves treating potentially deadly gasses. The joint venture was also seen at the time as a
stepping stone for Shell to renew a coveted concession to develop the United Arab Emirates' largest onshore oil field. The Bab sour joint venture envisaged
the construction of a 1 billion cubic feet sour gas processing plant for domestic market consumption. "The evaluation concluded that for Shell, the
development of the project does not fit with the company's strategy, particularly in the economic climate prevailing in the energy industry," Shell said in a
statement on Monday. ADNOC was expected to hold 60% of the Bab sour gas project, while Shell would have held 40%. (Reuters)
mashreq Fixed Income Trading
Daily Market Update Tuesday, January 19, 2015
Page 2
Dollar pegs seen bending while reserves keep them from breaking
Countries with currencies pegged to the dollar are coming under increasing attacks by traders who bet it’s become too expensive for policy makers to
continue defending exchange rates amid a soaring greenback and a collapse in commodities prices. Although Kazakhstan, Azerbaijan and Argentina have
been forced to devalue, and derivatives tied to the Saudi Arabia riyal and Hong Kong dollar suggest traders expect it won ’t be long before the same
happens to those currencies, it may be the speculators who end up losing. Options prices put the odds of the Hong Kong dollar weakening beyond the
weaker end of its current trading range this year at 36%, Bloomberg data show. What traders may be underestimating are the hefty reserves available to
policy makers and their willingness to defend the pegs, which have anchored their economies for decades and helped them survive financial crises in 1997
and 2008, according to analysts at Deutsche Bank AG and Union Bancaire Privee Ubp SA. Together, Saudi Arabia and Hong Kong hold USD1 trillion in
foreign reserves, or enough to cover their imports and spending for years. Devaluations would only serve to destabilize their economies and could
undermine Hong Kong’s status as Asia’s financial center, the analysts say. Hong Kong Monetary Authority Chief Executive Norman Chan on Monday
reiterated his commitment to keeping the exchange rate’s existing link to the US dollar. Hong Kong’s 32- year-old dollar peg was threatened last week after
a slide in the Chinese yuan sparked speculation that the authorities may revise the system to tighten its link to the mainland. HKMA’s Chan said there is no
intention or need to reform the exchange rate and he expects the Hong Kong dollar to drop to the weak end of its trading range. Hong Kong holds a record USD359 billion in foreign reserves and can tap into China’s USD3.3 trillion coffer. Its currency board arrangement, which requires every Hong Kong dollar
in circulation to be backed by an equivalent amount of the US currency, means the money supply would shrink in case of capital outflows, pushing interest
rates higher and making the local currency more attractive. Hong Kong companies, in the past, were also able to slash costs and wages, to maintain their
competitiveness without having the city resort to devaluation. Twelve-month forwards for the Saudi Arabian riyal, which investors use to bet on or hedge the currency, tumbled to an all-time low of 3.87 per dollar this month. That was about 2% weaker than the country’s 3.75-per-dollar peg, suggesting
traders are betting on the end of the 30-year peg, according to data compiled by Bloomberg. The Saudi kingdom pledged last week to stick with the peg
and said “mis-perception” is driving forwards contracts higher. While Saudi Arabia, the world’s largest oil exporter, has burnt through 15% of its foreign
reserves since August to defend the riyal, the stockpile at USD636 billion, is still the third largest in the world after China and Japan. Instead of devaluing
the currency, the kingdom is cutting spending and subsidies to cope with the decline of oil revenue and may tap debt markets this year to fund a deficit.
(Bloomberg)
China records GDP growth of 6.9% in 2015 China’s economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the leadership struggles to manage a
transition to consumer-led expansion. Industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while GDP rose 6.8%
in the fourth quarter from a year earlier. Full-year GDP growth of 6.9%, the least since 1990, was in line with the government’s target of about 7%%.
Industrial production posted one of the weakest gains in the past quarter century, increasing 5.9% in December from a year earlier. That compared with a 6% median estimate of analysts and November’s 6.2%. Retail sales increased 11.1% from a year earlier, compared with the 11.3% projected by
economists. Fixed- asset investment excluding rural areas expanded 10% last year, the slowest pace since 2000. China ’s top leadership has signaled in
recent months it may allow some additional slowness as they tackle delicate tasks such as reducing excess capacity, but nothing that could threaten
President Xi Jinping’s goal of at least 6.5% growth through 2020. The world’s second-largest economy will slow to 6.5% this year and 6.3%% next year,
according to the median of economist estimates. China’s economy is growing at two speeds, with old rust-belt industries from steel to coal and cement in
decline while consumption, services and technology do better. Services accounted for 50.5% of output last year. The policy response to last year’s
slowdown included accelerated monetary easing with six interest-rate cuts since late 2014 and increased fiscal spending. Through the turbulence, the
central bank forged ahead with interest-rate liberalization by removing a cap on deposit rates and won the International Monetary Fund ’s approval for the
yuan to enter its Special Drawing Rights basket of reserve currencies. This year, attention is likely to turn more to a new focus on supply-side reforms such
as slashing excess industrial capacity and labor in state enterprises, cutting taxes and boosting productivity. (Bloomberg)
ADNOC to receive around USD 3.3billion in loan from Japanese banks Japan Bank for International Cooperation (JBIC) has signed a loan agreement with the UAE’s state-owned Abu Dhabi National Oil Company (ADNOC) for up
to USD 2.1billion to help secure long-term oil supplies. Seven other Japanese firms, including the Bank of Tokyo-Mitsubishi UFJ, will provide additional
financing, taking the total loan amount to USD 3.3billion. The loans will help Japanese companies in their efforts to renew oil field concessions in Abu Dhabi, of which 60% will expire in 2018. JBIC and other Japanese banks have provided three other loan facilities to ADNOC since 2007. The other co-
financing firms are Sumitomo Mitsui Banking Corporation, Mizuho Bank, Mitsubishi UFJ Trust and Banking Corporation, Citibank Japan Limited, Sompo
Japan Nipponkoa Insurance, and Sumitomo Mitsui Trust Bank. Japan relies on Abu Dhabi for about a quarter of total crude imports. (Reuters)
BoE's Vlieghe 'patient' on rate hike, could back cut if slowdown worsens
The Bank of England's newest policymaker Gertjan Vlieghe said on Monday he would take a "patient" approach to raising interest rates and there was even a chance he might favour a cut if a slowdown in Britain's economy worsened. Underscoring how the mood at the BoE in the last few months has shifted
away from signalling a first rate hike since before the financial crisis, Vlieghe also said economic growth and interest rates might be permanently lower.
"For a given level of growth, real interest rates may remain significantly lower than in the past," he said in his first speech since joining the BoE from a
hedge fund in September. (Reuters)
Francois Hollande pledges to ‘redefine’ the French economic model to tackle unemployment crisis
Francois Hollande, the French president, has admitted that his country is in “a state of economic emergency”, as the country battles eye-wateringly high
unemployment rates. Mr Hollande has set out a raft of proposals aimed at “redefining” the French economic model, a plan that will require the French
government to spend more than €2 billion (£1.5 billion). His proposals include deregulation aimed at encouraging businesses to take on new staff, and
training schemes for half a million workers. The proportion of jobseekers out of work is at an 18-year high, and is more than twice the UK level. Under the
jobs plan, companies with under 250 workers will receive a €2,000 subsidy for hiring young and unemployed workers for periods of more than six months.
A further €1 billion will be allocated towards improving the skills of the workforce. (Telegraph.co.uk)
Asia Islamic bonds find new life in 2016 after worst year in five
Asian issuers are leading a promising start to the year for global Islamic bonds after the poorest annual showing since 2010. Malaysia’s sovereign wealth
fund Khazanah Nasional Bhd. started investor meetings in the Middle East, Asia and Europe on January 17. Indonesia’s government is due to pick banks for
an offering by the end of January, the sixth consecutive year it’s issued international sukuk. Kazakhstan and Bangladesh are also both considering sales.
The two entities will have to navigate emerging-market turmoil triggered by a sliding Chinese yuan and tumbling commodities. Indonesia is on high alert
after last week’s terrorist attacks in Jakarta, while Malaysia needs to repair confidence after its credit outlook was cut by Moody’s Investors Service. Sales
of global Shariah-compliant securities fell 30% to USD34.9 billion last year and there’s so far been no new offerings in 2016, data compiled by Bloomberg
show. Khazanah, which is rated A3 by Moody’s and the same level as the sovereign, last sold foreign-currency Islamic debt in 2014. It issued USD500
million of seven-year sukuk convertible into equities of state power company Tenaga Nasional Bhd. Moody’s cut Malaysia’s credit-rating outlook to stable
from positive earlier in January, citing an external environment that has crimped government revenue. Asia ’s only major net oil exporter has been hit by a
42% tumble in Brent crude prices over the past 12 months and stands to lose 300 million ringgit (USD68 million) for every USD1 drop in the price of the
mashreq Fixed Income Trading
Daily Market Update Tuesday, January 19, 2015
Page 3
commodity, according to government estimates. Indonesia, which is rated three levels lower than Malaysia, plans to issue as much as USD2 billion of global
sukuk in 2016, Robert Pakpahan, director general for budget financing and risk management at the Finance Ministry, was citing as saying by the local daily
Kontan in October 2015. It sold USD2 billion of 10-year dollar Islamic notes in May at a coupon of 4.325% and drew USD6.8 billion in orders. The securities
were yielding 5.08% on Monday, compared with 4.96% at the end of 2015, data compiled by Bloomberg show. (Bloomberg)
African bonds suffer the most in EM bonds rout Emerging-markets bonds are experiencing the worst start to a year on record but the pain is greatest in sub-Saharan Africa. The world’s poorest continent
accounts for half of the 20 worst-performing dollar bonds issued by developing nations. It’s also the only region in the world where not one country’s debt
has produced a positive return, with African securities falling 5.4% this year, compared with the average 1.3% loss in emerging markets, the worst first
two weeks of a year since Bloomberg began compiling data in 2010. The malaise means governments will find it more expensive to issue debt just when
they most need financing to plug budget deficits that are widening amid a plunge in prices for commodities from oil to copper. Average yields on sub-
Saharan African Eurobonds have surged to 9.4%, compared with 5.8% in April last year, according to the Bloomberg USD Emerging Market Sovereign Bond Index. Yields on dollar debt in Zambia and Ghana have climbed above 15%, with only Venezuela and Ecuador paying more among emerging markets.
Zambian notes are the biggest losers in Africa, with declines of more than 14%, the most among 61 developing nations tracked by Bloomberg after
Venezuela. Economic growth in sub-Saharan Africa probably slowed to 3.8% last year, from 5% in 2014, accelerating to 4.3%% this year, according to the
IMF. Nigeria may sell debt for the first time since 2013 to fund a record spending plan, Finance Minister Kemi Adeosun said last month. Kenya is also
gauging investor support for further issuance, the Financial Times reported on January 14, citing Treasury Secretary Henry Rotich. African issuance in 2015
declined to USD6.75 billion, compared with a record USD8 billion a year earlier, according to data compiled by Bloomberg. (Bloomberg)
World's top steel industry shrinks for first time since 1991 Steel output in the world’s largest producer posted the first annual contraction in a quarter century. Mills in China, which make half of global supply,
churned out less last year for the first time since at least 1991 as local demand dropped, prices sank and producers struggled with overcapacity. Crude steel production shrank 2.3% to 803.83 million metric tons, the statistics bureau said Tuesday. December output fell 5.2% to 64.37 million tons from a
year earlier. Demand is weakening as policy makers seek to steer the economy away from investment toward consumption-led growth. The economy
expanded 6.9% last year, the slowest full-year pace since 1990, data showed. (Bloomberg)
Puerto Rico says shortfall to increase to USD23.9 billion
Puerto Rico said the island’s financial situation is worsening and increased estimates of how much the commonwealth will fall short of being able to make
debt payments over the next decade to USD23.9 billion. Revenue will fall short of covering principal and interest payments each year through 2025,
according to an updated fiscal and economic growth plan released by Governor Alejandro Garcia Padilla’s administration Monday. The payment deficit over
the next five years has widened to an estimated USD16.06 billion, up from a USD14 billion forecast in September. Creditors asked Puerto Rico to extend
the plan to 10 from five years, the administration said. The swelling gap is based in part on lower than anticipated revenue collections for this fiscal year,
the report said. The update was made as Puerto Rico engages in talks with bondholders to reduce the island’s USD70 billion debt burden. Without a debt
restructuring, there will be widespread defaults throughout the commonwealth’s debt stack, a senior Puerto Rico official reiterated in a phone call with
reporters Monday. uerto Rico expects to offer its creditors a debt-restructuring proposal ”soon,” a senior commonwealth official said during Monday’s call
with reporters. (Bloomberg)
Australian consumer confidence falls again amid Chinese economy worries Persistent worries over a slowdown in China’s economy and international stock market jitters are troubling Australian consumers. The ANZ-Roy Morgan
consumer confidence index fell 0.8% in the week ending January 17, after falling 1.9% the previous week. (The Guardian)
Earnings Update
Emirates Islamic net profit up 76% in 2015 Emirates Islamic Bank announced its full-year financial results for 2015 yesterday, with the bank reporting strong growth for the fourth consecutive year.
For the twelve months ending December 31st 2015, the bank reported a net profit of AED 641 million, a 76% year-on-year increase. The bank’s total net
income (net of customers’ share of profit) during the period rose to AED2.43 billion, up 25% compared to AED1.95 billion in 2014. Commenting on the
bank’s performance, Hesham Abdulla Al Qassim, Chairman of Emirates Islamic, said, "With consistently strong results and solid double-digit growth rates,
Emirates Islamic continues to drive the expansion of the Islamic banking sector in UAE. In just a short span of time, the bank has asserted its position as a
leading financial institution in the UAE, with strong contribution to the development of the Islamic finance sector. (Reuters)
Ratings Update
Fitch affirms Qatar National Bank at 'AA-' Fitch Ratings has affirmed Qatar National Bank's ( QNB ) Long-term Issuer Default Rating (IDR) at 'AA-' with a Stable Outlook. At the same time the
agency has placed QNB's Viability Rating (VR) of 'a' on Rating Watch Negative (RWN) following QNB's proposed acquisition of Finansbank. QNB's IDRs,
Support Rating (SR) and Support Rating Floor (SRF) reflect Fitch's expectation of support from the Qatari authorities for domestic banks in case of need.
Fitch's expectation of support from the authorities reflects Qatar's strong ability to provide support to its banks, as indicated by its rating (AA/Stable),
combined with Fitch's belief that there would be a strong willingness to do so. The latter is based on a history of sovereign support including recent years'
measures to boost capital as well as asset purchases. The government has demonstrated strong commitment to its banks and key public-sector companies
and we expect this to continue despite the effects of lower oil prices. The sovereign's capacity to support the banking system is sustained by its sovereign
wealth funds and on-going revenues, mostly from its hydrocarbon production. Fitch makes a distinction between QNB's SRF and that of the other banks in Qatar as a result of its status as the flagship bank in the sector, its role in the Qatari banking sector and close business links with the state. In addition, the
government owns a 50% stake in QNB . The Stable Outlook reflects the Outlook on the Qatari sovereign. QNB's VR reflects its dominant franchise in Qatar,
close links to the Qatari government, strong funding profile with sound liquidity and solid capital position. Profitability is stronger than that of most peers.
Risk appetite is fairly conservative despite rapid growth and expansion into some higher-risk markets. High loan and deposit concentrations, which would
otherwise constrain the rating, are mitigated by QNB's largest borrowers and depositors being primarily lower risk Qatari government-related entities.
(Bloomberg)
Fixed Income Trading
USD INVESTMENT GRADE ISSUES (LONG TERM)
Security Name ISIN Code MaturityOutstanding
Amount (Mio)
Coupon
TypeCoupon % Indic. Bid
Indic.
Offer
Offer
Yield %
Credit Rating
S&P/Moody/FitchCountry Payment Rank Min. Size
Risk
Rating
ABBVIE INC US00287YAL39 6-Nov-2022 3071 FIXED 2.90 99.12 99.12 3.04 A/Baa1/- UNITED STATES Sr Unsecured 2,000 P2
ABBVIE INC US00287YAQ26 14-May-2025 3750 FIXED 3.60 98.66 98.66 3.77 A/Baa1/- UNITED STATES Sr Unsecured 2,000 P2
ADOBE SYSTEMS INC US00724FAC59 1-Feb-2025 1000 FIXED 3.25 100.50 100.50 3.18 A-/Baa1/- UNITED STATES Sr Unsecured 2,000 P2
AIRBUS GROUP FINANCE BV USN2823BBD21 17-Apr-2023 1000 FIXED 2.70 98.74 98.74 2.89 A/A2/A- FRANCE Sr Unsecured 1,000 P2
ALCOA INC US013817AV33 15-Apr-2021 1250 FIXED 5.40 92.50 92.50 7.14 BBB-/Ba1/BB+ /*+ UNITED STATES Sr Unsecured 2,000 P2
AMAZON.COM INC US023135AJ58 29-Nov-2022 1250 FIXED 2.50 98.34 98.34 2.77 AA-/Baa1/- UNITED STATES Sr Unsecured 2,000 P2
AMERICAN EXPRESS CO US025816BD05 2-Dec-2022 1266 FIXED 2.65 97.41 97.41 3.07 BBB+/A3/A+ UNITED STATES Sr Unsecured 2,000 P2
AMERICAN INTL GROUP US026874DD67 10-Jul-2025 1250 FIXED 3.75 98.33 98.33 3.96 A-/Baa1/BBB+ UNITED STATES Sr Unsecured 2,000 P2
AT&T INC US00206RCM25 30-Jun-2022 2750 FIXED 3.00 99.54 99.54 3.08 BBB+/Baa1/A- UNITED STATES Sr Unsecured 2,000 P2
AT&T INC US00206RCN08 15-May-2025 5000 FIXED 3.40 97.42 97.42 3.73 BBB+/Baa1/A- UNITED STATES Sr Unsecured 2,000 P2
BANK OF AMERICA CORP US06051GEU94 11-Jan-2023 4250 FIXED 3.30 99.13 99.13 3.44 BBB+/Baa1/A UNITED STATES Sr Unsecured 2,000 P2
BANK OF AMERICA CORP US06051GFP90 21-Apr-2025 2500 FIXED 3.95 98.13 98.13 4.20 BBB/Baa3/A- UNITED STATES Subordinated 2,000 P3
BARCLAYS PLC US06738EAE59 16-Mar-2025 2000 FIXED 3.65 95.69 95.69 4.22 BBB/Baa3/A UNITED KINGDOM Sr Unsecured 200,000 P2