mashreq Fixed Income Trading Daily Market Update Market Update • • • • Tuesday, June 23, 2015 Greece given 48 hours to reach deal as EU leaders weigh debt European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make the final push needed to satisfy creditors and end a five-month standoff over aid that risks splitting the euro. Leaders from Greece’s 18 fellow euro-zone countries agreed that Tsipras’s government was finally getting serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week. The package of proposals represents “a certain step forward, but it was also said very clearly that we’re not yet where we need to be,” German Chancellor Angela Merkel told reporters in Brussels after an emergency summit Monday night. “Hours of the most intensive deliberations lie ahead of us.” Greek stocks and bonds surged earlier on Monday after Tsipras’s government submitted new proposals addressing the areas of pensions and fiscal targets that had proven the chief barriers to a deal. Disagreement remains over the fine print, with revenue from sales-tax rates the chief sticking point, according to an EU diplomat who asked not to be named because the talks are private. A meeting of euro-area finance ministers was convened for Wednesday to prepare the ground for a second, scheduled summit of European Union leaders that begins the following day. Negotiations with creditors will continue over the coming 48 hours to achieve a “total and viable solution,” Tsipras told reporters in the early hours of Tuesday. The government aims for the country “to be able to stand again on its feet very soon,” he said. With the clock ticking toward a June 30 deadline both for the expiry of the European portion of Greece’s bailout and payments to the International Monetary Fund, leaders stressed the work still to do in the time available. While they didn’t discuss the IMF payment, they did raise Greece’s future financial viability given its debt load, the highest in Europe. French President Francois Hollande cited “the lengthening of maturities, or re-profiling of the debt,” saying that “it needs to be indicated as a forthcoming step,” albeit not in the coming days. Merkel said that rendering Greece’s debt sustainable wasn’t discussed in detail, but “it became clear that this question of financial viability has to be part of the agreement.” (Bloomberg) UAE telco Etisalat says to allow foreign share ownership Etisalat, the UAE's former telecoms monopoly, said on Monday that restrictions on who could own its shares would be partly lifted. This will open the Gulf state's largest stock to foreign and institutional ownership for the first time. The telecoms operator did not state in its bourse filing when the change would take effect, but said local and foreign institutions and expatriate individuals would be able to hold up to 20 percent of the company. The promise of an end to ownership restrictions follows a decision from the federal government, the statement said. However, Etisalat added that the Emirates Investment Authority (EIA), a UAE government fund that owns 60 percent of the business, had no intention of reducing its Etisalat stake for the time being. The remaining 40 percent of Etisalat shares are owned by individual Emirati citizens. The UAE joined MSCI's Emerging Markets index at the end of May 2014. MSCI chooses to include stocks in its indexes based on a number of criteria, many of which are linked to the ease at which foreign investors can move in and out of positions. Etisalat has operations in around 18 countries across the Middle East, Africa and Asia and competes locally with du. (Reuters) World Bank's lender plans sukuk sale after Gulf summer The International Finance Corp (IFC), the World Bank's lender to the private sector, has started work on a return to the market for Islamic bonds, or sukuk, with plans to issue sharia-compliant debt after summer in the Gulf region. Last year an IFC official said a deal was in the early stages of discussion, which would be the third time the World Bank's development division issues sukuk. "We are hoping for an issuance soon after the summer. This is very much work in progress and as you can imagine much depends on underlying assets and market conditions," said Alexandra Klopfer, a spokeswoman for the IFC in Washington. Details such as currency, tenor and size were not yet available. The IFC, which aims to spur private investment in developing countries, last sold a USD 100 million five-year sukuk in 2009, listing it on the Dubai and Bahrain bourses. Its first sukuk came in 2004 in Malaysia, a 500 million Malaysian ringgit (USD 134 million) three-year deal. (www.arabianbusiness.com) UAE's inflation rate edges up to 4.3% in May The UAE's inflation rate edged up towards six year highs in May amid continuing upward pressure from the cost of housing and utilities, according to the UAE National Bureau of Statistics. Inflation rose to 4.3 percent year-on-year from 4.2 percent the previous month, and is just 0.2 percent off January's rate which was the highest level since May 2009. Housing and utility costs, which account for over 39 percent of consumer expenses, jumped 9.4 percent from a year earlier in May, according to the data cited by Reuters on Monday. The emirate of Abu Dhabi, the biggest emirate in the UAE, hiked electricity and water tariffs from January 1, while the real estate market has been rising. Food and soft drink prices, which account for nearly 14 percent of the basket, gained 1.4 percent year-on-year. (www.arabianbusiness.com) Page 1
Transcript
mashreqFixed Income Trading
Daily Market Update
Market Update
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Tuesday, June 23, 2015
Greece given 48 hours to reach deal as EU leaders weigh debt
European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make the final push needed to satisfy creditors and end a five-month
standoff over aid that risks splitting the euro. Leaders from Greece’s 18 fellow euro-zone countries agreed that Tsipras’s government was finally getting
serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step
up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.
The package of proposals represents “a certain step forward, but it was also said very clearly that we’re not yet where we need to be,” German Chancellor
Angela Merkel told reporters in Brussels after an emergency summit Monday night. “Hours of the most intensive deliberations lie ahead of us.” Greek
stocks and bonds surged earlier on Monday after Tsipras’s government submitted new proposals addressing the areas of pensions and fiscal targets that
had proven the chief barriers to a deal. Disagreement remains over the fine print, with revenue from sales-tax rates the chief sticking point, according to an
EU diplomat who asked not to be named because the talks are private. A meeting of euro-area finance ministers was convened for Wednesday to prepare
the ground for a second, scheduled summit of European Union leaders that begins the following day.
Negotiations with creditors will continue over the coming 48 hours to achieve a “total and viable solution,” Tsipras told reporters in the early hours of
Tuesday. The government aims for the country “to be able to stand again on its feet very soon,” he said. With the clock ticking toward a June 30 deadline
both for the expiry of the European portion of Greece’s bailout and payments to the International Monetary Fund, leaders stressed the work still to do in the
time available. While they didn’t discuss the IMF payment, they did raise Greece’s future financial viability given its debt load, the highest in Europe. French
President Francois Hollande cited “the lengthening of maturities, or re-profiling of the debt,” saying that “it needs to be indicated as a forthcoming step,”
albeit not in the coming days. Merkel said that rendering Greece’s debt sustainable wasn’t discussed in detail, but “it became clear that this question of
financial viability has to be part of the agreement.” (Bloomberg)
UAE telco Etisalat says to allow foreign share ownership
Etisalat, the UAE's former telecoms monopoly, said on Monday that restrictions on who could own its shares would be partly lifted. This will open the Gulf
state's largest stock to foreign and institutional ownership for the first time. The telecoms operator did not state in its bourse filing when the change would
take effect, but said local and foreign institutions and expatriate individuals would be able to hold up to 20 percent of the company.
The promise of an end to ownership restrictions follows a decision from the federal government, the statement said. However, Etisalat added that the
Emirates Investment Authority (EIA), a UAE government fund that owns 60 percent of the business, had no intention of reducing its Etisalat stake for the
time being. The remaining 40 percent of Etisalat shares are owned by individual Emirati citizens. The UAE joined MSCI's Emerging Markets index at the end
of May 2014.
MSCI chooses to include stocks in its indexes based on a number of criteria, many of which are linked to the ease at which foreign investors can move in
and out of positions. Etisalat has operations in around 18 countries across the Middle East, Africa and Asia and competes locally with du. (Reuters)
World Bank's lender plans sukuk sale after Gulf summer
The International Finance Corp (IFC), the World Bank's lender to the private sector, has started work on a return to the market for Islamic bonds, or sukuk,
with plans to issue sharia-compliant debt after summer in the Gulf region. Last year an IFC official said a deal was in the early stages of discussion, which
would be the third time the World Bank's development division issues sukuk.
"We are hoping for an issuance soon after the summer. This is very much work in progress and as you can imagine much depends on underlying assets and
market conditions," said Alexandra Klopfer, a spokeswoman for the IFC in Washington. Details such as currency, tenor and size were not yet available.
The IFC, which aims to spur private investment in developing countries, last sold a USD 100 million five-year sukuk in 2009, listing it on the Dubai and
Bahrain bourses. Its first sukuk came in 2004 in Malaysia, a 500 million Malaysian ringgit (USD 134 million) three-year deal. (www.arabianbusiness.com)
UAE's inflation rate edges up to 4.3% in May
The UAE's inflation rate edged up towards six year highs in May amid continuing upward pressure from the cost of housing and utilities, according to the
UAE National Bureau of Statistics. Inflation rose to 4.3 percent year-on-year from 4.2 percent the previous month, and is just 0.2 percent off January's rate
which was the highest level since May 2009. Housing and utility costs, which account for over 39 percent of consumer expenses, jumped 9.4 percent from a
year earlier in May, according to the data cited by Reuters on Monday.
The emirate of Abu Dhabi, the biggest emirate in the UAE, hiked electricity and water tariffs from January 1, while the real estate market has been rising.
Food and soft drink prices, which account for nearly 14 percent of the basket, gained 1.4 percent year-on-year. (www.arabianbusiness.com)
Page 1
mashreqFixed Income Trading
Daily Market Update
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New Issue Update
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Ratings Update
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National Bank of Egypt- Investor Meetings
National Bank of Egypt S.A.E ("NBE"), the wholly state-owned and largest bank in Egypt by assets, equity and deposits, is considering issuing a
benchmark USD Regulation S senior bond. The bond is expected to be rated B-/B by S&P/Fitch. The Roadshow schedule has been announced:
Kurdistan picks Goldman, Deutsche Bank for bond meetings
The Kurdistan Regional Government, which oversees the semi-autonomous region of northern Iraq, has picked Goldman Sachs International and Deutsche
Bank AG for a potential bond sale as it seeks greater independence from Baghdad. The two banks will “organize a series of meetings with international fixed-
income investors in London, with a view to a potential transaction in the near future,” the KRG said on its website on Monday. The meetings will run
Tuesday through Friday, a person familiar with the plan said, asking not to be identified as the details are private. The bond plan underscores the deepening
tension between the semi-autonomous region and the central government of Baghdad over Kurdistan’s share of the national budget and its control of oil
sales. Fighting with Islamic State militants on the Iraqi-Kurdistan border has spurred an influx of refugees into the region, weighing on its economy. The
Kurdistan administration will need at least $1.4 billion in assistance to stabilize the economy after growth slowed from 8 percent in 2013 to 3 percent last
year, and poverty doubled, the World Bank said in a report in February. The Kurdish region holds 45 billion barrels of oil reserves, while the rest of Iraq has
150 billion barrels, the world’s fifth-largest known deposits. The efforts to sell crude separately from the central government has provoked legal action by
authorities in Baghdad.
Kazakhstan picks banks to arrange US dollar bond roadshow
The Republic of Kazakhstan, rated Baa2/BBB/BBB+ (with stable/negative/stable outlooks), has mandated Citi and J.P. Morgan to arrange a series of fixed
income investor meetings in London and the US commencing on June 24, 2015. A USD-denominated benchmark 144a/Reg S international bond offering
may follow, subject to market conditions, with Citi and J.P. Morgan as Joint-Lead Managers and Joint Bookrunners and Kazkommerts Securities and Halyk
Finance as Joint-Lead Managers.
Fitch Affirms Egypt at 'B'; Outlook Stable
Fitch Ratings has affirmed Egypt's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'B' with a Stable Outlook. The issue ratings on
Egypt's senior unsecured foreign and local currency bonds have also been affirmed at 'B'. The Country Ceiling and the Short-term foreign currency IDR have
been affirmed at 'B'. (Bloomberg)
Tuesday, June 23, 2015
Dubai Investments completes Al Mal Capital stake deal
Dubai Investments said on Monday that it has completed the acquisition of a 59.66% stake in Al Mal Capital. Allied to the 1.20 percent already held by the
company, Dubai Investments now holds an overall shareholding of 60.86 percent in Dubai-based Al Mal, which offers a range of investment products spread
across its business lines of investment banking, brokerage and asset management. The acquisition paves the way for Dubai Investments to enter the
financial services sector and adds a strategic element to its diversified investment base, it said in a statement without giving a value to the deal. Al Mal said
its board has given the go ahead for the appointment of a consultant to work on aligning Al Mal’s strategy with DI requirements.
Khalid Bin Kalban, managing director and CEO of Dubai Investments and chairman of Al Mal, said: “We are excited about investing in Al Mal and believe we
are well positioned to capitalise on their operational expertise and disciplined approach to risk management.” He added: “We have been eyeing an entry into
the financial services sector for some time and the integration of Al Mal into the DI Group gives us the edge that we need as we continue our drive towards
delivering even more value to our stakeholders.” (www.arabianbusiness.com)
Iraq aims to hold investor roadshow by end-July for USD 5bln bond issue
Iraq hopes to meet investors by the end of July to present plans for a $5 billion bond issue, the country's finance minister Hoshiyar Zebari told Reuters on
Monday. The government has hired JP Morgan, Citibank and Deutsche Bank to arrange its first debt sale in nine years, to cover a budget deficit caused by
low oil prices and its conflict with Islamic militants.
Iraqi officials met with the three banks and credit rating agencies Fitch Ratings and Moody's Investors Service on June 16, Zebari said. "We completed a
very successful round of due diligence with the three banks and with the ratings agencies in Istanbul, and I think they are on board," he said. The country's
need for cash is acute; the government has projected a budget deficit of about $25 billion this year, in a budget of roughly $100 billion. "They haven't given
a rating, but we answered all their questions and we wait for them to do their analysis and let us know," Zebari said of the rating agencies on Monday. "But
it's an important step for Iraq." In early June, the International Monetary Fund reached an agreement with Iraq for a USD 833 million loan programme, a
step towards increasing investor confidence. (www.zawya.com)
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mashreqFixed Income Trading
Daily Market Update
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Change Change USD EUR AED
Spread Day YTD Last 1d Chg Last 1d Chg Last 1d Chg
Arab Republic of Egypt 5Y 329.930 0.000 48.150 Spot Silver 16.05 2.13
Source: Bloomberg WTI Crude 59.97 12.58
Brent Crude 63.19 10.22
Source: Bloomberg
Change Change
1 Month 1 Year
Mashreq Al-Islami Income Fund 15.52380 -0.28% 4.23%
Mashreq Al-Islami Arab Tigers 19.69270 -3.72% 0.97%
Makaseb Income Fund 13.01907 -0.15% 1.83%
Source: Bloomberg
Tuesday, June 23, 2015
bps
CDS MISCELLANEOUS
Change
Day
Moody's affirms State Bank of India ratings; assigns Counterparty Risk Assessment
Moody's Investors Service has affirmed State Bank of India's (SBI) local and foreign currency deposit ratings of Baa3/P-3. Moody's has also affirmed the
(P)Baa3 ratings on the bank's and its branches' senior unsecured medium term note (MTN) program, and the Baa3 rating on the senior unsecured debt
issued from its London branch. The outlook of SBI and its branches is positive. In addition, Moody's has affirmed SBI's baseline credit assessment (BCA) and
adjusted BCA of ba1. Furthermore, Moody's has assigned a Counterparty Risk Assessment (CR Assessment) of Baa3/P-3 to SBI and its branches in line with
Moody's new bank rating methodology. Moody's has also affirmed the (P)Ba1 ratings on the banks' and its branches' foreign currency subordinated MTN
program, and the (P)Ba2 ratings on the banks' and its branches' foreign currency junior subordinate MTN program. (Bloomberg)
Fitch Downgrades Two Bahraini Banks to 'BBB-'; Outlook Stable
Fitch Ratings has downgraded National Bank of Bahrain's (NBB) and BBK B.S.C.'s (BBK) Long-term Issuer Default Ratings (IDRs) to 'BBB-' from 'BBB'. Fitch
has affirmed Ahli United Bank B.S.C.'s (AUB) IDR at 'BBB+'. The Outlooks are Stable. At the same time, Fitch has downgraded NBB's Viability Rating (VR) to
'bbb-' from 'bbb'. The rating actions follow Fitch's downgrade of the Bahraini sovereign. (Bloomberg)
CREDIT MARKETS SWAPS
-1.63
-0.17
-0.41
-0.15
MUTUAL FUNDS
Last (NAV)
12.86
103.83
22.41
25.09
30.10
-68.84
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Fixed Income Trading
June 23, 2015
Security Name ISIN Code MaturityOutst.
Amnt (Mn)
Min Piece/
Incr. (000)
Value at
MaturityCurrency Coupon Type Coupon % Indic. Bid Indic. Offer
Offer Yield
%
Credit Rating
S&P /Moody /Fitch
Abu Dhabi Govt Int'L XS0422754258 08-Apr-19 1500 100/1 100 USD Fixed 6.750 116.50 118.50 1.68 AA /Aa2 /AA
Arab Republic Of Egypt XS0505265859 29-Apr-20 1000 100/1 100 USD Fixed 5.750 101.75 105.75 4.42 B- /B3 /B
Arab Republic Of Egypt XS0505478684 30-Apr-40 500 100/1 100 USD Fixed 6.875 96.38 100.38 6.84 B- /B3 /B
Egypt 3M T Bills N/A 15-Sep-15 2500 500/25 100 EGP Zero Cpn N/A 96.87 97.34 8.76 B/B2/B+
Egypt 6M T Bills N/A 15-Dec-15 3000 500/25 100 EGP Zero Cpn N/A 93.68 94.57 9.22 B/B2/B+
Egypt 9M T Bills N/A 08-Mar-16 4000 500/25 100 EGP Zero Cpn N/A 91.15 92.38 9.06 B/B2/B+
Egypt 1Y T Bills N/A 07-Jun-16 4000 500/25 100 EGP Zero Cpn N/A 88.17 89.71 9.38 B/B2/B+
(C) Denotes a Convertible bond
(S) Denotes a Sukuk
* Offer Yield adjusted for tax
Egypt T Bills
Page 24
Fixed Income Trading
June 23, 2015
Contact:
Mashreq Fixed Income Trading
Mohammad Ahsan / Khizer Usmani / Zeeshan Ali / Usman Khan / Khurram Hussain / Yasmeen Rabbani / Shakoor Ahmed / Jean-Francois Bargiarelli
Sali Al Khatib
Telephone: +9714-2128822
For live prices, please visit our Bloomberg page MASH <GO>
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