MENA Daily Fixed Income Report - 24 December

Transcription

1. MENA Daily Fixed Income Report – 24 December 2020 Kuwait Financial Centre “Markaz” News Updates GCC Sovereign Yields Fitch Ratings affirms KIB’s long-term IDR at ‘A+’ with a stable Sovereigns Maturity Yield % outlook – Fitch Ratings, one of the leading global credit ratings agencies, 2025 0.73 has affirmed Kuwait International Bank (KIB)’s Long-term Issuer Default Abu Dhabi Abu Dhabi 2030 1.57 Rating (IDR) at ‘A+’ and viability rating (VR) at “bb-“, with a stable outlook. Abu Dhabi 2050 2.73 This stable outlook on KIB’s long-term IDR reflects the outlook on the Bahrain 2026 3.32 Kuwaiti sovereign rating. In its report issued on 22 December 2020, Fitch Bahrain 2030 4.78 stated that KIB’s Issuer Default Ratings (IDRs) reflect an extremely high Bahrain 2047 6.11 probability of support from the Kuwaiti authorities, if needed. This 2029 2.58 considers Kuwait’s strong ability to provide support to domestic banks, as Dubai reflected by its sovereign rating (AA/Stable) and strong willingness to do Kuwait 2022 0.05 so irrespective of the banks’ size, franchise, funding structure and the Kuwait 2027 1.07 level of government ownership. Fitch also added that key rating drivers Bonds and Sukuk Indices include stable funding, nominal domestic franchise, higher risk appetite, asset quality and profitability under pressure, adequate but declining Index Name Bloomberg GCC FI Index capitalization. (Source: Kuwait Times, Fitch) UAE GDP expected to shrink more than anticipated in 2020 – The Central Bank of the UAE (CBUAE) expected a 6% contraction in the UAE's gross domestic product (GDP) in 2020, compared to its previous forecast of a 5.2% decline. The real non-hydrocarbon GDP is projected to decrease by about 5% in the current year, according to the CBUAE's quarterly economic review. In 2021, the CBUAE forecasts that the UAE's real total GDP and non-hydrocarbon real GDP would grow by 2.5% and 3.6%, respectively. The CBUAE's outlook is better than that of IMF which expected a 6.6% shrink in the UAE economy in 2020. Meanwhile, the UAE is expected to see a contraction in the real oil GDP in 2020, driven by an average oil production of 2.8 million barrels per day for this year. In line with OPEC+ agreement, the UAE oil production decreased by 4.1% year-on-year (YoY) in the second quarter (Q2) and by 17.7% in the third quarter (Q3). "As an oil exporter, the UAE is likely to feel the fallout from reduced global demand for oil due to the contraction of economic activities worldwide, including transportation and international travel," the report referred. It is noteworthy to mention that in September, the CBUAE expected a 5.2% decrease in the UAE GDP in 2020 due to the coronavirus (COVID-19) pandemic. (Source: Mubasher) KSA 2025 1.13 Price ∆ (YTD %) 6.96 Sovereigns Maturity Yield % 2.00 11.12 KSA A1 A-u A 2050 3.23 10.42 UAE Aa2 NR AA- Abu Dhabi Aa2 AA AA Qatar Aa3 AA- AA- 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 -1.26 Oman 2025 4.14 -1.26 16.51 Oman 2029 5.48 -1.51 -3.79 Oman 2048 6.81 -1.80 2.66 Qatar 2025 0.81 6.94 1.44 Qatar 2030 1.60 12.66 6.08 Qatar 2050 2.78 23.48 8.08 -0.04 8.62 S&P MENA Bond and Sukuk Index 2.01 NA -0.08 9.12 Bloomberg Emerging Markets USD Index 3.54 6.80 -0.02 6.17 Bloomberg Global Aggregate Index 0.86 7.42 -0.04 8.57 Interbank Rates (%) 6 Months 24/12/2020 31/12/2019 1.6875 2.9375 0.8700 2.2557 2.5333 2.7000 1.0500 2.3500 0.5935 2.1914 -0.5220 -0.3240 0.2628 1.9121 USD Swap Rates 2-Year 5-Year 10-Year 30-Year 12 Months 24/12/2020 31/12/2019 1.9375 3.1875 0.9413 2.3071 2.6833 2.8333 1.3667 2.5333 0.6875 2.2900 -0.4930 -0.2490 0.3373 1.9963 Currencies YTD ∆ (%) -88.5 -87.7 -73.8 -62.2 -49.7 -31.8 US Treasuries KWD SAR BHD QAR OMR AED USD 0.3037 3.7527 0.3771 3.6420 0.3850 3.6729 UK Guilts Yield % 0.12 0.37 0.94 1.68 1D ∆ (%) 0.00 -0.01 0.00 -0.03 AA 2030 2.46 1D ∆ (bps) 0.08 -0.07 0.32 0.24 0.12 0.14 Fitch KSA YTD ∆ (%) Yield % 0.2028 0.2093 0.4532 0.6787 0.9525 1.4265 AA- KSA 1D ∆ (%) KIBOR SAIBOR BHIBOR QATAR AEIBOR EURIBOR LIBOR A1 9.58 Duration (yrs) 3 Months 24/12/2020 31/12/2019 1.4375 2.7500 0.8188 2.2314 2.2500 2.6667 0.9500 2.2500 0.4275 2.2086 -0.5390 -0.3830 0.2381 1.9084 Moody’s S&P Kuwait 19.31 Yield % 1-Year 2-Year 5-Year 7-Year 10-Year Turkey's Inflation Surprise to Prompt a 100bp Rate Hike – The new 30-Year governor of the Central Bank of the Republic of Turkey bought credibility with a hefty hike to the one-week repo rate in November. Subsequent data showed a surprising surge in inflation to 14%. This will be enough for the central bank to hike the repo rate by 100 bps -- to 16% -- despite a stabilizing currency, a halt in reserve depletion and slower household dollarization. Bloomberg’s expectation is below the consensus forecast, which projects a 150-bp hike. (Source: Bloomberg) Sovereign Ratings Price ∆ (YTD %) 5.43 Yield % -0.16 -0.05 0.28 0.86 1D ∆ (bps) 0.0000 0.0027 0.0000 0.0055 0.0000 0.0000 YTD ∆ (%) -0.18 -0.02 0.01 0.01 -0.01 0.01 German Bunds 1D ∆ (%) -0.04 -0.32 -1.26 -3.38 Yield % -0.73 -0.75 -0.61 -0.16 1D ∆ (%) -0.04 -0.16 -0.45 -1.49 B Morocco Ba1 BBB- BB+ US Aaa AA+u AAA UK Aa2 AAu AA- China A1 A+ A+ USD 5Yr CDS 24-Dec 2020 31-Dec 2019 Kuwait 40.19 36.700 KSA 65.83 56.915 Abu Dhabi 36.67 36.090 Dubai 106.91 91.005 Qatar 37.53 36.705 Bahrain 235.91 175.995 Oman 350.54 234.400 Iraq 545.22 383.680 Egypt 340.36 277.420 Morocco 102.62 91.435 Turkey 324.38 282.130 US 11.58 10.810 UK 15.61 16.210 China 30.71 31.205 Japan 14.16 21.042 Germany 9.24 7.080 France 14.43 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.