MENA Daily Fixed Income Report - 14 January

Transcription

1. MENA Daily Fixed Income Report – 14 January 2021 Kuwait Financial Centre “Markaz” News Updates Saudi Arabia May Be Tempted to Sell Debt Soon – Brent crude’s rebound to the highest since February and now-harmonious relations with Qatar set up a chance for Saudi Arabia to return to global debt markets. The world’s largest crude exporter could attract strong demand to its planned offering of about $5 billion without having to pay a big premium over the existing yield curve -- despite rising U.S. yields and investor concerns that President-elect Joe Biden may be less tolerant of the kingdom’s human rights record. Saudi dollar bonds have probably already been penalized after trailing other Gulf Arab states since the start of the year with losses of 1.3%. That makes its current yields attractive. Saudi Arabia’s debt due 2050 is trading at a yield that’s 24bps higher than Indonesia’s security of similar maturity even though the Gulf Arab sovereign is rated four levels higher than the Asian nation by Moody’s. And yet it’s still cheap for the kingdom to borrow. The yield on Saudi Arabia’s bond maturing in 2029, at 2.06%, is around 90 basis points lower than a year ago and less than half of what it was when it was issued in January 2019. (Source: Bloomberg) EM Hard Currency Bond Sales May Decline in 2021: Morgan Stanley – Emerging-market sovereigns will probably sell a gross total of $209 billion in hard-currency debt this year, down from a record $234 billion in 2020, according to estimates by Morgan Stanley. Mexico, the United Arab Emirates and Israel could see largest drop in issuance at over $7.5b in 2021 compared with 2020, strategists including Simon Waever and Jaiparan Khurana wrote in a report. Saudi Arabia is expected to be the largest issuer with $14.5b worth of bond sales, followed by the UAE and Indonesia, which are likely to issue $13b each. High-yield issuance may climb by $9b to $76b, while investment-grade debt sales will probably fall by $34b to $133b. Local-bond issuance is likely to fall, driven by the largest regional issuers, including China, Brazil and Russia. (Source: Bloomberg) Fed’s Brainard Says Bond Buying Needed for ‘Quite Some Time’ – Federal Reserve Governor Lael Brainard pushed back against suggestions the central bank could taper its bond-buying program later this year, arguing the U.S. economy will need that monetary support for “quite some time.” “The economy is far away from our goals in terms of both employment and inflation, and even under an optimistic outlook, it will take time to achieve substantial further progress,” Brainard said Wednesday in a virtual speech to the Canadian Association for Business Economics. “Given my baseline outlook, I expect that the current pace of purchases will remain appropriate for quite some time.” The Fed last month signaled interest rates would stay near zero at least through 2023 to help the U.S. economy recover from the Covid-19 pandemic, and pledged to keep buying bonds at a $120 billion monthly pace until “substantial further progress” had been made on its employment and inflation goals. (Source: Bloomberg) GCC Sovereign Yields Sovereign Ratings Abu Dhabi 2025 0.84 Price ∆ (YTD %) -0.37 Abu Dhabi 2030 1.64 Abu Dhabi 2050 2.90 Bahrain 2026 Bahrain 2030 Bahrain Dubai Sovereigns KSA 2025 1.20 Price ∆ (YTD %) -0.14 -0.61 KSA 2030 2.18 -1.25 KSA A1 A-u A -2.87 KSA 2050 3.49 -3.79 UAE Aa2 NR AA- 3.34 -0.40 Oman 2025 4.23 -0.43 AA AA -2.26 Oman 2029 5.58 -1.18 Abu Dhabi Aa2 5.09 Qatar Aa3 AA- AA- 2047 6.29 -2.35 Oman 2048 6.97 -2.75 2029 2.46 0.28 Qatar 2025 0.92 -0.28 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 Maturity Yield % Sovereigns Maturity Yield % Kuwait 2022 0.30 -0.29 Qatar 2030 1.71 -0.79 Kuwait 2027 1.25 -0.86 Qatar 2050 2.97 -2.67 Bonds and Sukuk Indices Yield % Duration (yrs) 1D ∆ (%) YTD ∆ (%) Bloomberg GCC FI Index 2.53 8.08 0.22 -0.93 S&P MENA Bond and Sukuk Index 2.09 NA 0.19 -1.07 Bloomberg Emerging Markets USD Index 3.66 6.80 0.23 -1.16 Bloomberg Global Aggregate Index 0.87 7.42 0.36 -0.62 Index Name Interbank Rates (%) KIBOR SAIBOR BHIBOR QATAR AEIBOR EURIBOR LIBOR 3 Months 14/1/2021 31/12/2020 1.4375 1.4375 0.8175 0.8175 2.2333 2.2500 1.0849 1.1206 0.3625 0.5125 -0.5490 -0.5450 0.2338 0.2384 6 Months 14/1/2021 31/12/2020 1.6875 1.6875 0.8675 0.8700 2.5000 2.5333 1.1625 1.1960 0.5400 0.4908 -0.5300 -0.5260 0.2476 0.2576 USD Swap Rates 1-Year 2-Year 5-Year 7-Year 10-Year 30-Year Yield % 0.2037 0.2189 0.5591 0.8264 1.1169 1.5928 Currencies 1D ∆ (bps) 0.03 0.25 1.73 2.03 2.42 2.12 YTD ∆ (%) 5.8 10.7 30.0 26.2 20.7 13.6 US Treasuries 2-Year 5-Year 10-Year 30-Year 12 Months 14/1/2021 31/12/2020 1.9375 1.9375 0.9400 0.9413 2.6667 2.6833 1.2923 1.3636 0.5525 0.6538 -0.5060 -0.4990 0.3256 0.3419 KWD SAR BHD QAR OMR AED USD 0.3031 3.7517 0.3770 3.6420 0.3850 3.6730 UK Guilts Yield % 0.15 0.49 1.11 1.84 1D ∆ (%) -0.01 -0.08 -0.21 -0.46 Yield % -0.13 -0.02 0.30 0.87 1D ∆ (bps) -0.0330 0.0000 -0.0027 0.0027 0.0000 0.0000 YTD ∆ (%) 0.07 0.00 0.00 0.00 0.00 0.00 German Bunds 1D ∆ (%) 0.05 0.10 0.52 1.27 Yield % -0.68 -0.75 -0.61 -0.13 1D ∆ (%) 0.01 0.10 0.46 1.73 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 14-Jan 2021 31-Dec 2020 Kuwait 41.68 40.69 KSA 63.88 63.77 Abu Dhabi 41.45 36.03 Dubai 98.77 104.06 Qatar 41.29 36.70 Bahrain 234.99 233.58 Oman 345.41 353.60 Iraq 573.36 542.74 Egypt 310.93 330.47 Morocco 101.68 102.56 Turkey 317.15 299.47 US 11.31 11.52 UK 15.18 15.13 China 29.21 26.70 Japan 13.78 14.74 Germany 9.46 9.09 France 14.21 14.42 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.