CEEMEA Credit Update Summary
Core Content and Overview
This document provides a comprehensive analysis of credit market dynamics in the CEEMEA (Central and Eastern Europe, the Middle East, and Africa) region, focusing on sovereign and corporate credit spreads, upcoming market events, and key developments affecting credit performance. The report highlights the impact of global market trends, particularly the US-China trade truce and the upcoming Opec+ and FOMC meetings, on the CEEMEA credit market. It also discusses the performance of various sovereign and corporate bonds, including specific credit ratings, spread changes, and market outlook.
Main Focus and Market Events
- Market Focus: The main focus for the upcoming week is the Opec+ meeting and the FOMC rate decision on 19 December.
- Global Impact: The drop in UST 10y yields to 2.9% is supportive for Credit, especially for Investment Grade.
- Trade Truce: The recent US-China trade truce at the G20 summit positively influenced EM Credit, including CEEMEA.
- Sovereign Performance: South Africa's Q3 GDP was above expectations, but BNP Paribas economists remain cautious due to political and fiscal uncertainties.
Credit Highlights
- Akbank (AKBNK): Announced a TL3bn capital increase via a Rights Issue, which will boost its CAR and Tier 1 ratios by ~80bp. This is expected to support its solvency buffers and competitive positioning.
- Investment Grade Bonds: The report reiterates a Buy trade idea on both AKBNK 7.2% 27 Sub and AKBNK 6.797% 28 Sub, expecting positive reactions to the capital increase.
- Ferrexpo (FXPOLN): Investors are advised to take profit on the Buy trade idea for its '19 bonds. The bond currently offers a 10.375% carry and stands at $407k P&L. Ferrexpo's strong liquidity is expected to support bond repayment, and it may temporarily avoid external bond markets.
Data Releases
- Week Commencing 06 December 2018:
- Monday: Turkey GDP (3Q), Czech CPI (Nov)
- Tuesday: Turkey Current Account (Oct), S.Africa Manufacturing Production (Oct), Hungary CPI (Nov)
- Wednesday: US CPI (Nov), S.Africa CPI (Nov)
- Thursday: Turkey Rate Decision
- Friday: Poland CPI (Nov-F), Rating Reviews for Turkey, Kuwait, Serbia, and Slovenia
Global EM Indexes & Benchmarks
| Index |
6-Dec |
1w |
1m |
3m |
YTD |
| EMBI Global |
421 |
-9 |
39 |
14 |
110 |
| BBG EM Aggregate |
323 |
-7 |
30 |
0 |
97 |
| IG |
183 |
-2 |
19 |
19 |
49 |
| HY |
562 |
-15 |
52 |
-33 |
201 |
| BBG EM Global Sov |
366 |
-12 |
35 |
-19 |
111 |
| CEEMEA |
322 |
-14 |
33 |
-3 |
101 |
| LATAM |
484 |
-5 |
46 |
-45 |
116 |
| Asia |
205 |
-8 |
14 |
16 |
65 |
| BBG EM Global Corps |
368 |
-4 |
33 |
27 |
134 |
| BBG US Corporates |
175 |
8 |
28 |
32 |
54 |
| UST 10Y |
2.91 |
-11.99 |
-31.77 |
3.68 |
50.45 |
EM Cross-Asset Snapshot
| Index |
5-Dec |
1w Δ |
1m Δ |
YTD |
| CDX EM Global |
208 |
-1 |
17 |
89 |
| RUSSIA 5Y |
157 |
-14 |
16 |
40 |
| TURKEY 5Y |
384 |
-9 |
22 |
217 |
| REPSOU 5Y |
217 |
-23 |
-3 |
58 |
| KSA 5Y |
92 |
-7 |
-2 |
-1 |
| CDX US IG |
79 |
6 |
14 |
30 |
| CDX US HY |
406 |
21 |
46 |
98 |
| iTraxx IG Europe |
82 |
2 |
12 |
37 |
| iTraxx Xover Europe |
330 |
-11 |
42 |
97 |
| EMFX |
62 |
-0.9% |
-0.5% |
-10.5% |
| EM Local Govt Bonds |
130 |
0.1% |
1.1% |
-4.4% |
| MSCI DM |
2009 |
-1.3% |
-2% |
-4.5% |
| MSCI EM |
1002 |
0.4% |
1% |
-13.5% |
| VIX (ppt) |
20.7 |
1.7 |
0.8 |
9.7 |
EM Commodities & Currencies
| Commodity/Currency |
6-Dec |
3m Δ |
YTD Δ |
BBG Consensus 2018 |
BBG Consensus 2019 |
| Brent $/bbl |
61.2 |
-19.3% |
-7.7% |
73 |
76 |
| Iron Ore Fines 62% Fe $/t |
67.3 |
1% |
-6% |
69 |
63 |
| Coking Coal $/t |
223 |
17.4% |
-7.9% |
- |
- |
| Coil-Hot-R. China export $/t |
545 |
-13.3% |
-12.5% |
- |
- |
| Nickel $/t |
11,225 |
-9.8% |
-12% |
13,060 |
11,343 |
| Aluminium $/t |
1,969 |
-4.8% |
-13.2% |
2,150 |
2,150 |
| Copper |
6,175 |
5.2% |
-14.8% |
6,580 |
6,630 |
| DAP $/t |
427 |
-1.8% |
9.5% |
- |
- |
| Ethylene NWE $/t |
895 |
-26.6% |
-23.8% |
- |
- |
| Gold $/oz |
1,236 |
3% |
-5.2% |
1,264 |
1,258 |
| Diamonds (index) |
120.1 |
0.3% |
3.7% |
- |
- |
| Cocoa |
2,110 |
-9.1% |
7.3% |
2,372 |
2,144 |
| TRY/$ |
5.35 |
3% |
0% |
-23% |
29% |
| ZAR/$ |
13.9 |
1% |
-2% |
-11% |
11% |
| RUB/$ |
66.7 |
1% |
1% |
-4% |
14% |
EM Global Issuance by Week
| Week # |
Global |
Asia |
CEEMEA |
LATAM |
| 42 |
12,997 |
5,448 |
2,246 |
5,303 |
| 43 |
7,093 |
2,368 |
4,564 |
161 |
| 44 |
12,043 |
7,833 |
3,531 |
679 |
| 45 |
11,778 |
7,209 |
3,302 |
1,266 |
| 46 |
10,862 |
6,271 |
3,845 |
746 |
| 47 |
5,533 |
5,533 |
- |
- |
| 48 |
6,677 |
5,106 |
1,571 |
- |
| 49 |
6,987 |
6,987 |
- |
- |
| Total Issuance ytd |
481,766 |
244,005 |
165,044 |
72,717 |
| Net Issuance ytd |
226,275 |
142,420 |
58,465 |
25,390 |
EM Sovereigns Spread Summary
| Country |
Today |
1W Δ |
1M Δ |
3M Δ |
YTD Δ |
Aggr Rating |
Avg Duration |
Total Outstanding |
# of Bonds |
| CEE |
102 |
-2 |
22 |
22 |
39 |
BBB- |
5 |
$47,129 |
28 |
| Poland |
60 |
1 |
15 |
12 |
20 |
A- |
4 |
$10,750 |
5 |
| Hungary |
113 |
-5 |
25 |
28 |
39 |
BBB- |
6 |
$11,662 |
6 |
| Croatia |
117 |
-1 |
23 |
21 |
28 |
BB |
3 |
$7,500 |
5 |
| Serbia |
138 |
-2 |
26 |
27 |
47 |
BB |
2 |
$3,500 |
2 |
| Romania |
179 |
-3 |
32 |
38 |
104 |
BBB- |
12 |
$6,719 |
5 |
| CIS |
271 |
-18 |
43 |
28 |
94 |
BB- |
12 |
$59,964 |
33 |
| Russia |
202 |
-4 |
31 |
11 |
71 |
BB+ |
13 |
$33,331 |
11 |
| Ukraine |
567 |
-39 |
112 |
106 |
235 |
CCC+ |
7 |
$13,806 |
9 |
| Kazakhstan |
155 |
-11 |
33 |
31 |
15 |
BBB- |
14 |
$6,500 |
4 |
| GCC |
170 |
-9 |
15 |
0 |
47 |
A- |
12 |
$123,500 |
48 |
| Saudi Arabia |
148 |
-7 |
12 |
13 |
49 |
A |
14 |
$41,000 |
9 |
| Qatar |
114 |
-0 |
0 |
0 |
0 |
AA- |
13 |
$28,900 |
11 |
| Abu Dhabi |
87 |
-4 |
11 |
3 |
-9 |
AA |
10 |
$15,000 |
5 |
| Bahrain |
337 |
-15 |
-6 |
-73 |
-25 |
B+ |
9 |
$11,350 |
9 |
| Oman |
329 |
-24 |
39 |
10 |
168 |
BBB- |
12 |
$17,500 |
9 |
| Kuwait |
68 |
-14 |
13 |
7 |
-9 |
AA |
6 |
$8,000 |
2 |
| MENA (ex-GCC) |
487 |
-31 |
46 |
-74 |
201 |
B+ |
11 |
$91,164 |
55 |
| Turkey |
449 |
-21 |
45 |
-163 |
203 |
BB- |
12 |
$49,250 |
22 |
| Egypt |
469 |
-27 |
52 |
20 |
221 |
B- |
12 |
$14,000 |
9 |
| Morocco |
172 |
-8 |
24 |
22 |
50 |
BBB- |
11 |
$2,250 |
2 |
| Tunisia |
625 |
-27 |
66 |
88 |
281 |
B |
6 |
$1,000 |
1 |
| SSA |
346 |
-33 |
29 |
7 |
181 |
B+ |
12 |
$53,037 |
46 |
| South Africa |
285 |
-15 |
4 |
-13 |
98 |
BB+ |
12 |
$16,619 |
13 |
| Ghana |
133 |
-21 |
29 |
24 |
43 |
B |
13 |
$4,000 |
4 |
| Gabon |
200 |
-20 |
37 |
18 |
75 |
B |
6 |
$2,200 |
2 |
| Kenya |
559 |
-61 |
87 |
50 |
389 |
B+ |
12 |
$4,000 |
3 |
| Ivory Coast |
45 |
-5 |
6 |
2 |
15 |
B+ |
12 |
$4,618 |
4 |
| Senegal |
86 |
-7 |
11 |
12 |
33 |
B+ |
18 |
$2,600 |
3 |
Sovereign Rankings
Top 1W Outperformers (Spread Change in bp)
- Angola: -61
- Kenya: -61
- Nigeria: -49
- Ukraine: -39
- Belarus: -38
- Ethiopia: -34
- Egypt: -27
- Tunisia: -27
- Oman: -24
- Lebanon: -24
- Azerbaijan: -23
- Namibia: -21
- Turkey: -21
Top 1W Underperformers (Spread Change in bp)
- Zambia: 13
- Slovakia: 2
- Poland: 1
- Cameroon: 0
- Cameroon: 0
- Croatia: -1
- Serbia: -2
- Romania: -3
- Abu Dhabi: -4
- Russia: -4
- Lithuania: -5
- Dubai: -5
- Ivory Coast: -5
CEEMEA $ 5s-10s-30s Monitor
| Entity |
5s - 10s |
10s - 30s |
| Russia |
59 |
58 |
| Qatar |
30 |
58 |
| SOAF |
104 |
34 |
| KSA |
57 |
70 |
| Turkey |
41 |
24 |
| UKRAIN |
29 |
97 |
| EGYPT |
111 |
93 |
| KAZAKS |
93 |
96 |
| ZAMBIN |
-102 |
-70 |
| GHANA |
363 |
106 |
SOAF, RUSSIA, TURKEY, KSA and QATAR $ CDS basis Monitor
| Bond |
5-Dec |
3m avg |
3m min |
3m max |
1w Δ |
1m Δ |
| RUSSIA 5% '20 |
33 |
13 |
-7 |
37 |
-4 |
17 |
| RUSSIA 4.5% '22 |
0 |
11 |
-4 |
23 |
-9 |
-3 |
| RUSSIA 4.875% '23 |
-13 |
20 |
-13 |
42 |
-11 |
-31 |
| SOAF 5.5% '20 |
-4 |
-20 |
-36 |
1 |
5 |
30 |
| SOAF 5.875% '22 |
-3 |
-4 |
-19 |
9 |
-6 |
9 |
| SOAF 4.665% '24 |
-21 |
-9 |
-29 |
10 |
-6 |
-6 |
| TURKEY 5.125% '22 |
-47 |
-31 |
-53 |
25 |
-3 |
-18 |
| TURKEY 6.25% '22 |
-52 |
-38 |
-68 |
-20 |
-5 |
-23 |
| TURKEY 3.25% '23 |
-42 |
-12 |
-53 |
34 |
-4 |
-34 |
| KSA 2.375% '21 |
-9 |
-12 |
-37 |
7 |
25 |
3 |
| KSA 2.875% '23 |
-2 |
-5 |
-33 |
13 |
13 |
7 |
| KSA 3.25% '26 |
0 |
7 |
-14 |
19 |
10 |
-7 |
| QATAR 2.375% '21 |
-32 |
-9 |
-41 |
25 |
6 |
-19 |
| QATAR 4.5% '22 |
-13 |
3 |
-23 |
19 |
6 |
-15 |
| QATAR 3.25% '26 |
4 |
16 |
-9 |
31 |
7 |
-14 |
Key Information
- Market Outlook: The Opec+ and FOMC meetings are expected to influence the credit market and EM performance in the coming weeks and possibly next year.
- Credit Performance: The recent trade truce has positively impacted EM Credit, with EMBIG tightening by 9bp.
- Sovereign and Corporate Credit: There are notable spread changes across different countries, with some showing positive trends and others negative.
- Investment Opportunities: Akbank's capital increase is seen as a positive move, and Ferrexpo's bonds are highlighted for their strong liquidity and carry.
- Risks: Political and fiscal uncertainties are a concern, especially for sovereigns with lower credit ratings.
- Market Data: The report includes detailed data on credit spreads, market capitalisation, and bond performance across various countries and sectors.
Summary
The CEEMEA credit market is influenced by global events such as the Opec+ and FOMC meetings, with a focus on the potential impact on interest rates and EM Credit. The recent US-China trade truce has positively affected EM Credit, but concerns about subdued growth and political uncertainties remain. Akbank's capital increase is a significant positive for the bank, and Ferrexpo's bonds are noted for their strong carry and liquidity. The report highlights various sovereign and corporate bonds, their spread changes, and market performance, offering insights into investment opportunities and risks.
