Cnooc, the Chinese state-run oil company, has joined the global rush to raise cheap corporate credit, with a $4bn bond, the biggest international issue in Asia in a decade.
The oil group has successfully placed the largest-ever international bond by a Chinese state enterprise and done so in a bumper week for global US$ corporate bonds with US giants Apple and IBM also selling mega issues.
Cnooc has every reason to raise money now to refinance its recent acquisition of Nexen, the Canadian energy group. But does the global rush to market suggest some companies fear the doors may soon close? Continue reading »
Ghana is planning a mid-year bond to strengthen the public finances, according to the country’s president, John Mahama (pictured). “We are floating the bond to pay down some very high interest credit from the domestic market, to bring down our interest payments, and to bring the deficit back on track,” he told This is Africa. The bond brings further detail to the government’s March plans to reduce the fiscal deficit to 6 per cent of GDP from its 2012 high of 12 per cent. Continue reading »
When is a BBB- borrower actually a AA+? No, this isn’t financial trickery of the kind made famous in the US subprime fiasco (and perhaps repeated in China in 2012). It’s a new facility offered by the Asian Development Bank to promote cross-border borrowing within Asia.
Under the scheme, the ADB-backed fund guarantees the debt of a corporate issuer, and effectively lends out its rating, regardless of the company’s actual rating. It’s been a year in the making, but finally the scheme has broken the seal. Continue reading »
Sinopec has taken advantage of a huge demand for Asian debt by selling the second biggest ever US dollar bond deal in the region – and the biggest ever out of mainland China – at a lower interest rate than the Chinese government itself pays for similar debt. Continue reading »
Tunisia is hoping that the country’s first government sukuk, or Islamic bond, scheduled for later this year could spur companies in the North African country to raise Islamic debt and boost its sharia-compliant finance industry, writes Camilla Hall.
The government is working alongside the Islamic Development Bank – the multilateral lender – to pave the way for a 1bn dinar ($700m) sukuk sale that would set a benchmark for companies seeking to tap the Islamic debt markets, Elyes Fakhfakh, finance minister, told the Financial Times. Continue reading »
The Export-Import Bank of India has become the first Indian institution to issue bonds in Australian dollars, opening up a new market.
The bank raised $200m on Tuesday, double the amount planned, with a 5-year bond paying 5.76 per cent a year. Continue reading »
In the pantheon of financial news, China’s decision to open its interbank bond market to foreign investors may seem a small item. But the announcement, made on Wednesday, is a big one for two reasons.
First, it gives foreign institutions access to a major asset class. Second, its timing signifies that China’s financial reform train is still very much in motion just a few days after the dust finally settled on the country’s leadership reshuffle. Continue reading »
Another bearish call on emerging markets, this time from Barclays.
The bank says that the “case for EM assets is becoming more challenging” as equities have disappointed while in fixed income expected returns have fallen and the risks have risen.
But don’t give up, says the bank in a report published this week. Look for opportunities in “idiosyncratic factors” in specific markets. Continue reading »
Peru is typically grouped with Mexico, Panama, Colombia and Chile as one of Latin America’s high-growth economies, a darling of international investors. But how easy is it to invest in? Not easy at all, says Luis Miguel Castilla, Peru’s finance minister.
“Our diagnosis is that our own capital market is poorly developed; not deep; scarcely liquid,” he tells beyondbrics. Continue reading »
The 2000 dotcom crash brought the ultra-low interest rates that fed the US housing boom. After that blew up, the even looser monetary policies of the last few years have driven fears of a new bond bubble.
And in Asia, these bubble fears are inflated further by the success of the region’s own response to the crisis from the late 1990s. Continue reading »
There’s a risk that Venezuela will default, but really it won’t. That’s the thinking that drives the market in the Bolivarian Republic’s sovereign bonds. Investors charge hefty interest to buy debt issued by the chavista government because it does market-unfriendly things like appropriating foreign companies. But they know it won’t default, because it can’t afford to be shut out from international markets.
Really? Continue reading »
In October last year, beyondbrics wrote of a sub-Saharan debt rush – partly based on Zambia’s successful issue, and on investors’ hunt for yield and diversification.
But now there is now talk of “original sin” – excessive borrowing in non-domestic currency; yields have increased and spreads have widened. What’s going on? Chart of the week takes a look. Continue reading »
Egypt’s continued political turmoil has made its life hard in international debt markets, but its government is hoping to secure new funds by less conventional means through the issue of the country’s first sovereign Islamic bonds.
According to a Bloomberg report, the government plans to raise up to $1bn by June through sukuk sales, with one for domestic investors and one for foreign investors. Continue reading »
Despite racking up huge debts, China’s local governments aren’t allowed to issue bonds to help pay them off. Although there is a small trial programme underway, the market is still effectively closed.
However, the ban doesn’t stretch to local government finance vehicles – LGFVs for short – which are technically corporations, even though they do the work of a government body. Bonds issued by LGFVs – called chengtou bonds – have been booming. Continue reading »