MENA Daily Fixed Income Report - 17 December

Transcription

1. MENA Daily Fixed Income Report – 17 December 2020 Kuwait Financial Centre “Markaz” News Updates Saudi Wealth Fund Spending Won’t Offset Budget Cuts – Saudi Arabia's 2021 budget statement sees a decline in public spending over the next three years. Domestic investments by the sovereign wealth fund won't offset these cuts. This would limit the rebound from the virus shock. The direction of Saudi fiscal policy is contractionary. The government plans to reduce spending by $21 billion in 2021, a larger drop than the projected increase in domestic investments by the sovereign wealth fund (about $14 billion). Bloomberg analysts forecast the non-oil economy will shrink 2.8% this year before expanding 1.8% in 2021. Crude production cuts will restrict overall real GDP growth to 3.2% next year, up from a contraction of 3.8% in 2020. (Source: Bloomberg) AM Best Affirms Credit Ratings of Qatar Insurance Company Q.S.P.C. and Its Main Subsidiary – AM Best has affirmed the Financial Strength Ratings of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Qatar Insurance Company Q.S.P.C. (QIC) (Qatar) and its subsidiary, Qatar Reinsurance Company Limited (Qatar Re) (Bermuda). The outlook of these Credit Ratings (ratings) is negative. The ratings reflect QIC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). (Source: Bloomberg) Treasuries Steepen as Fed Leaves Bond-Buying Plans Unchanged – The Treasury market posted a modest selloff Wednesday after the Federal Reserve left its bond-program unchanged, while making clear that it could take action down the road if needed. The gap between 2- and 10year yields briefly climbed back toward the day’s widest levels after the release of the Fed’s policy statement, before paring to finish the day just marginally wider. Earlier in the day it reached its steepest since October 2017 amid signs U.S. lawmakers are close to a deal on a virus-relief package. With the two-year yield relatively immobilized by expectations that the Fed will keep its policy rate at 0%-0.25% indefinitely, changes in Treasuries occur mainly in longer maturities, causing the curve to steepen in selloffs and flatten in rallies. Investors watch the spread as a barometer of expectations for the economy, with steepening suggesting a brighter outlook. “Powell did say the right things in the press conference -- saying they will be there if they need to be,” regarding adjusting asset purchases and other measures, said Andy Brenner, head of institutional fixed income at National Alliance. (Source: Bloomberg) GCC Sovereign Yields Sovereigns Maturity Sovereign Ratings Price ∆ (YTD %) 5.23 Yield % Abu Dhabi 2025 0.81 Abu Dhabi 2030 1.59 Abu Dhabi 2050 2.71 Bahrain 2026 3.31 Bahrain 2030 4.75 Bahrain 2047 6.09 Dubai 2029 2.59 KSA 2025 1.16 Price ∆ (YTD %) 6.86 9.43 KSA 2030 2.07 10.56 KSA A1 A-u A 19.75 KSA 2050 3.23 10.26 UAE Aa2 NR AA- -1.19 Oman 2025 4.29 -1.65 AA AA Oman 2029 5.55 -1.83 Abu Dhabi Aa2 16.82 Qatar Aa3 AA- AA- -3.48 Oman 2048 6.82 -1.92 2.56 Qatar 2025 0.93 6.56 Bahrain B2 B+ B+ Oman Ba3 B+ BB- Egypt B2 B B+ Lebanon C SD RD Jordan B1 B+ BB- Turkey B2 B+u BB- Tunisia B2 NR Sovereigns Maturity Yield % Kuwait 2022 0.13 1.40 Qatar 2030 1.68 12.11 Kuwait 2027 1.11 5.93 Qatar 2050 2.79 23.21 Bonds and Sukuk Indices Yield % Duration (yrs) 1D ∆ (%) YTD ∆ (%) Bloomberg GCC FI Index 2.49 8.08 0.10 8.41 S&P MENA Bond and Sukuk Index 2.02 NA 0.12 9.00 Bloomberg Emerging Markets USD Index 3.56 6.80 0.16 5.97 Bloomberg Global Aggregate Index 0.85 7.42 0.09 8.66 Index Name Interbank Rates (%) KIBOR SAIBOR BHIBOR QATAR AEIBOR EURIBOR LIBOR 3 Months 17/12/2020 31/12/2019 1.4375 2.7500 0.8213 2.2314 2.2500 2.6667 1.2666 2.2500 0.4590 2.2086 -0.5440 -0.3830 0.2288 1.9084 6 Months 17/12/2020 31/12/2019 1.6875 2.9375 0.8725 2.2557 2.5333 2.7000 1.3389 2.3500 0.5693 2.1914 -0.5200 -0.3240 0.2518 1.9121 USD Swap Rates 1-Year 2-Year 5-Year 7-Year 10-Year 30-Year Yield % 0.1939 0.2037 0.4369 0.6567 0.9240 1.3933 Currencies 1D ∆ (bps) -0.07 0.01 0.31 0.33 0.39 0.52 YTD ∆ (%) -89.0 -88.0 -74.7 -63.5 -51.2 -33.4 US Treasuries 2-Year 5-Year 10-Year 30-Year 12 Months 17/12/2020 31/12/2019 1.9375 3.1875 0.9425 2.3071 2.6833 2.8333 1.5058 2.5333 0.8500 2.2900 -0.5030 -0.2490 0.3313 1.9963 KWD SAR BHD QAR OMR AED USD 0.3038 3.7517 0.3771 3.6415 0.3850 3.6730 UK Guilts Yield % 0.11 0.37 0.92 1.66 1D ∆ (%) 0.01 0.00 -0.03 -0.10 Yield % -0.09 -0.04 0.27 0.83 1D ∆ (bps) 0.1152 0.0000 0.0053 -0.0027 0.0000 0.0000 YTD ∆ (%) -0.21 0.00 0.00 0.01 0.00 0.00 German Bunds 1D ∆ (%) 0.03 0.01 -0.16 -0.21 Yield % -0.75 -0.77 -0.63 -0.17 1D ∆ (%) -0.05 -0.16 -0.40 -1.24 Moody’s S&P Kuwait A1 AA- Fitch AA B Morocco Ba1 BBB- BB+ US Aaa AA+u AAA UK Aa2 AAu AA- China A1 A+ A+ USD 5Yr CDS 17-Dec 2020 31-Dec 2019 Kuwait 40.19 36.700 KSA 63.33 56.915 Abu Dhabi 34.92 36.090 Dubai 101.86 91.005 Qatar 36.23 36.705 Bahrain 241.98 175.995 Oman 351.12 234.400 Iraq 500.72 383.680 Egypt 340.47 277.420 Morocco 94.25 91.435 Turkey 345.27 282.130 US 12.95 10.810 UK 15.87 16.210 China 27.19 31.205 Japan 14.42 21.042 Germany 9.20 7.080 France 15.04 16.130 Source: Bloomberg This report has been prepared and issued by Kuwait Financial Centre K.P.S.C. (Markaz) , which is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report can not be published. A number of sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of this report.