MENA Daily Fixed Income Report - 3 December

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1. MENA Daily Fixed Income Report – 3 December 2020 Kuwait Financial Centre “Markaz” News Updates Tadawul, IHS Markit develop local currency Sukuk indices – The Saudi Stock Exchange (Tadawul) has developed, in collaboration with IHS Markit, a broader local currency-denominated benchmark index, iBoxx Tadawul SAR Government Sukuk & Bond Index, and iBoxx Tadawul SAR Government Sukuk Index Series, which is divided into maturity subindices. The indices provide transparency to the Saudi local currency and Saudi Government Sukuk and Bond market performance, Tadawul said in a recent statement. As part of the primary tools of active and passive investment managers, these indices can be used by dealer banks, ETF issuers, buy-side investment firms, and third-party vendors to benchmark portfolio performance and risk. (Source: Mubasher) PIF-backed Saudi Real Estate Refinance plans debut bond issue – Saudi Real Estate Refinance Company (SRC) will tap international debt markets for a debut $500 million dollar-denominated bond early next year, to fund the growth of its loan book, its chief executive said. The company, founded three years ago to support a domestic market for home loans, will also tap the local sukuk market with a one-year, 10 billion riyals ($2.7 billion) guaranteed bond issue programme before its international foray, Fabrice Susini told The National. “We will target around $500m for the first international issuance, probably not below. It could be a bit more. We'll see. It will depend … on the situation in the market at that time,” Mr Susini said. SRC is also planning to enter into the structured finance market next year, either through a securitisation of some of its loan book or issuance of a covered bond as the company looks to diversify its funding sources. GCC Sovereign Yields Sovereigns Sovereign Ratings Price ∆ (YTD %) 5.14 Yield % Abu Dhabi 2025 0.83 Abu Dhabi 2030 1.57 Abu Dhabi 2050 2.67 Bahrain 2026 3.41 Bahrain 2030 4.94 Bahrain 2047 6.22 Dubai 2029 2.62 KSA 2025 1.21 Price ∆ (YTD %) 6.63 9.70 KSA 2030 2.09 10.39 KSA A1 A-u A 20.73 KSA 2050 3.23 10.38 UAE Aa2 NR NR -1.53 Oman 2025 4.62 -2.83 AA AA Oman 2029 5.75 -3.15 Abu Dhabi Aa2 15.52 Qatar Aa3 AA- AA- -5.24 Oman 2048 7.07 -5.02 2.38 Qatar 2025 0.95 6.53 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 0.26 1.24 Qatar 2030 1.69 12.02 Kuwait 2027 1.13 5.85 Qatar 2050 2.77 23.93 Bonds and Sukuk Indices Yield % Duration (yrs) 1D ∆ (%) YTD ∆ (%) Bloomberg GCC FI Index 2.56 8.08 0.05 7.94 S&P MENA Bond and Sukuk Index 2.07 NA -0.03 8.74 Bloomberg Emerging Markets USD Index 3.68 6.80 0.04 4.99 Bloomberg Global Aggregate Index 0.89 7.42 0.05 7.68 Index Name Interbank Rates (%) KIBOR SAIBOR BHIBOR (Source: The National) QATAR Fitch Revises Arabian Centre's Outlook to Negative; Affirms at 'BB+' AEIBOR – Fitch Ratings has revised the Outlook on Saudi Arabia-based real EURIBOR estate company Arabian Centres Company's (ACC) Long-Term Issuer LIBOR Default Rating (IDR) to Negative from Stable and affirmed the IDR at 'BB+. Fitch has also affirmed the'BB+' unsecured rating and 'BB+' rating of the sukuk trust certificates issued through Arabian Centres Sukuk Limited (ACSL). The ratings reflect the company's competitive position as the largest retail real estate company in Saudi Arabia (KSA), owning and operating a portfolio of 21 retail malls in the most populous cities of the country, while also considering asset concentration, a front-loaded lease maturity profile and a high exposure to related-party tenants and transactions. The Negative Outlook reflects exposure to the nascent KSA retail market, which continues to be affected by an economic slowdown, a tripling of VAT, which may impact consumer spending, and most recently, COVID-19. In addition, the company's rental income is vulnerable due to a short-term lease profile and potential downward pressure from relatedparties. (Source: Bloomberg) Maturity 3 Months 3/12/2020 31/12/2019 1.4375 2.7500 0.8300 2.2314 2.2500 2.6667 1.2567 2.2500 0.3323 2.2086 -0.5260 -0.3830 0.2320 1.9084 6 Months 3/12/2020 31/12/2019 1.6875 2.9375 0.8788 2.2557 2.5333 2.7000 1.3167 2.3500 0.6250 2.1914 -0.5080 -0.3240 0.2588 1.9121 USD Swap Rates 1-Year 2-Year 5-Year 7-Year 10-Year 30-Year Yield % 0.2147 0.2362 0.4686 0.6804 0.9363 1.3872 Currencies 1D ∆ (bps) 0.03 0.00 0.41 0.50 0.72 1.07 YTD ∆ (%) -87.9 -86.1 -72.9 -62.1 -50.6 -33.7 US Treasuries 2-Year 5-Year 10-Year 30-Year 12 Months 3/12/2020 31/12/2019 1.9375 3.1875 0.9488 2.3071 2.6833 2.8333 1.4383 2.5333 0.6000 2.2900 -0.4870 -0.2490 0.3331 1.9963 KWD SAR BHD QAR OMR AED USD 0.3045 3.7511 0.3771 3.6417 0.3850 3.6731 UK Guilts Yield % 0.16 0.42 0.94 1.70 1D ∆ (%) 0.00 -0.01 -0.05 -0.25 Yield % -0.04 0.02 0.35 0.92 1D ∆ (bps) 0.0493 0.0000 -0.0133 -0.0082 0.0000 0.0000 YTD ∆ (%) -0.46 0.02 -0.01 0.00 0.00 0.00 German Bunds 1D ∆ (%) 0.02 0.04 -0.09 -0.31 Yield % -0.72 -0.74 -0.59 -0.11 1D ∆ (%) 0.00 0.00 -0.07 -0.37 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 3-Dec 2020 31-Dec 2019 Kuwait 40.18 36.700 KSA 65.64 56.915 Abu Dhabi 35.45 36.090 Dubai 105.73 91.005 Qatar 35.85 36.705 Bahrain 254.37 175.995 Oman 363.87 234.400 Iraq 576.71 383.680 Egypt 348.46 277.420 Morocco 95.00 91.435 Turkey 371.92 282.130 US 12.34 10.810 UK 16.50 16.210 China 28.47 31.205 Japan 14.70 21.042 Germany 9.77 7.080 France 16.09 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.