Emerging Sovereign Debt Markets NEWS

Number 47 Week 18 – 24 November 2017

Table of contents

ASIA ...... 2 Sri Lanka PM appears before bond probe panel ...... 8 China ...... 2 EUROPE ...... 9 China to sell 7 bln yuan dim sum bonds in Hong Kong next week ...... 2 Albania ...... 9 China's bond squeeze could spread Albania to sell 1 bln leks (7.4 mln euro) of offshore ...... 2 7-yr T-notes ...... 9 China announces details of dim sum bond Bosnia ...... 9 sale due next Thursday ...... 3 IMF says Bosnia must carry out stalled India ...... 3 reforms to keep loan programme ...... 9 Indian bond yields fall after central bank Croatia ...... 10 cancels open market sale of debt...... 3 Croatia to issue new six-year local bond 10 Moody's upgrade boosts already growing Croatia opens books for new local bond . 10 confidence in Indian debt ...... 4 Croatia to issue six-year domestic bond . 10 Indian rupee swings up, bonds trim losses on market talk of S&P ratings upgrade ..... 5 Croatia raises 5.8 bln kuna (766.9 mln euro) in 2023 domestic bond ...... 10 India RBI Switches 100 Billion Rupees Of Bond Maturing In 2018-19 ...... 5 Czech Republic ...... 11 India Bond Traders Expect Tepid Demand Czechs to auction up to CZK 12 bln worth At Auction Post Switch ...... 5 of bonds in December ...... 11 Indonesia ...... 5 Czech government sees bigger fiscal surpluses, debt fall each year until 2020 11 Indonesia sells 5.95 trillion rupiah of Islamic bonds ...... 5 Hungary ...... 11 Lebanon ...... 6 Hungarian central bank provides EUR 240 mln worth of 12-month fx swaps ...... 11 Lebanon issues $1.7 bn eurobonds in debt swap with central bank...... 6 Hungary central bank says ready to buy longer-maturity mortgage bonds ...... 11 Lebanon's dollar bonds gain, CDS fall as Hariri suspends resignation ...... 6 Macedonia ...... 12 Pakistan ...... 6 Macedonia to sell 650 mln denars (10.5 mln euro) of 15-yr T-bonds ...... 12 Pakistan searches for new finance minister after Dar relieved of duties ...... 6 Poland ...... 12 Philippines ...... 7 Poland's finance ministry places 300 mln euros worth of Eurobonds ...... 12 Philippines mandates BOC for Panda bonds ...... 7 High spending may expose Poland to painful fiscal adjustment ...... 12 Philippines posts $431 mln budget deficit in Oct ...... 7 Poland sells 4.0 bln zlotys worth of bonds at tender ...... 12 Saudi Arabia ...... 7 Romania ...... 13 Saudi state budget deficit shrinks nearly 10 pct in third quarter ...... 7 Romania sells planned 200 mln lei (43 mln euro) of 2021 T-notes ...... 13 S&P says ratings on Saudi Arabia affirmed at 'A-/A-2'; outlook stable ...... 8 Serbia ...... 13 South Korea ...... 8 Serbia sells 50 mln euro of 5-yr T-bonds, yield drops ...... 13 South Korea's Q3 short-term external debt burden hits record 31.1 pct...... 8 Slovakia ...... 13 South Korea to sell 4.6 trln won T-bonds Slovaks raise 2037 bond sale to EUR in December ...... 8 106.5 mln after top-up round ...... 13 Sri Lanka ...... 8 Turkey ...... 13

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Turkish sovereign and bank bonds slide as Namibia ...... 19 political pressure rises ...... 13 Fitch Downgrades Namibia to 'BB+'; LATIN AMERICA AND CARIBBEAN ...... 14 Outlook Stable ...... 19 Fitch: Rising Lat Am, Carib Catastrophe Namibia's president says won't seek IMF Costs Pose Fiscal Risks ...... 14 or World bank bailouts ...... 21 Argentina ...... 14 Nigeria ...... 21 Argentina says Oct primary deficit shrank Nigeria launches US$3bn dual-tranche to $1.84 bln ...... 14 bond ...... 21 Barbados ...... 14 Rwanda ...... 21 IMF Staff Completes 2017 Article IV Rwanda raises 10 bln francs with 7-year Mission to Barbados ...... 14 Treasury bond ...... 21 Suriname ...... 16 South Africa ...... 21 Moody's places Suriname's B1 rating on Fitch Affirms South Africa at 'BB+'; review for downgrade ...... 16 Outlook Stable ...... 21 Venezuela ...... 16 Ratings cut? South Africa's local bonds already trade as junk ...... 23 As many Venezuela bondholders stampede, some joust for advantage ...... 16 Zambia ...... 24 Venezuela bondholders look to form Zambia moves to slow down debt alliances under restructuring limbo ...... 17 accumulation as it seeks IMF aid ...... 24 AFRICA ...... 18 Zimbabwe ...... 25 Algeria ...... 18 Zimbabwe's economic situation "very difficult" ...... 25 Algeria should pay debts owed to foreign and local firms ...... 18 GLOBAL ...... 25 Chad ...... 18 Sovereign funds pull $3.7 bln from global stock, bond markets in Q3 ...... 25 IMF credit to Chad delayed over Glencore oil debt ...... 18

Please note: The information contained herein is selected by the PDM Network Secretariat from and is provided as a service to Subscribers. is considered to be a reliable source. However, the Secretariat cannot guarantee the accuracy of information reported and is not responsible for any opinions expressed and data enclosed.

Phillips) (( [email protected] ; +852 2843 ASIA 6587; Reuters Messaging: [email protected] ))

China China's bond squeeze could spread China to sell 7 bln yuan dim sum bonds offshore in Hong Kong next week 24-Nov-2017 22-Nov-2017 By Pete Sweeney HONG KONG, Nov 22 (Reuters) - China's HONG KONG, Nov 24 (Reuters Breakingviews) - Ministry of Finance said on Wednesday it It is time to start worrying about Chinese planned to sell 7 billion yuan ($1.06 billion) bonds. Tightening regulation has provoked a dim sum bonds in Hong Kong next week. sharp selloff in the $9 trillion fixed-income The finance ministry has issued dim sum bonds market, with collateral damage to share. If stress is sustained, it could infect China‟s in Hong Kong annually since 2009 to boost the giant pile of foreign-currency debt. development of the offshore market. It sold the Anxiety has been increasing all year, as first batch of this year's offshore yuan bonds, President Xi Jinping takes a tougher line on worth 7 billion yuan, in June. financial risk. Regulators have suppressed The second batch will be sold to institutional techniques abused by speculators, such as investors, foreign central banks and monetary short-term borrowings using bond-repurchase authorities, the finance ministry said in a agreements and so-called negotiable certificates statement on its website. of deposit. This crackdown, combined with It has not specified the tenor or the exact date expectations of higher rates, had pushed up of issuance. benchmark yields without much panic until this

week. ($1 = 6.6200 Chinese yuan) (Reporting by Michelle Chen; Editing by Sherry Jacob- What tweaked local punters were central bank PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 2 guidelines targeting excesses in the $15 trillion HONG KONG, Nov 24 (Reuters) - China's asset management industry. The benchmark 10- Ministry of Finance will sell 7 billion yuan year treasury yield topped 4 percent on ($1.06 billion) dim sum bonds in Hong Kong Thursday, its highest since 2014. next Thursday. Overseas investors have watched Chinese The finance ministry has issued dim sum bonds markets closely since 2015, when a stock in Hong Kong annually since 2009 to boost the crash was felt around the world. Bonds are far development of the offshore market. It sold the more important. Stressed companies and first batch of this year's offshore yuan bonds, financial institutions have come to rely heavily worth 7 billion yuan, in June. on short-term debt issues to repay bank loans The second batch of yuan bonds include 4 billion and maturing wealth management products. The yuan 2-year bonds, 2 billion yuan 5-year bonds sector remains patchily regulated and distorted and 0.5 billion yuan 10-year bonds. by implicit guarantees. An additional batch of 0.5 billion yuan bonds will At the same time, cheaper funding costs led be sold to central banks, according to IFR, a many mainland firms to borrow in dollars. Thomson Reuters publication. Thomson Reuters data shows Chinese issuers sold more than $100 billion of bonds in dollars, ($1 = 6.5963 Chinese yuan renminbi) euros and yen by the end of September, up 24 (Reporting by Michelle Chen; Editing by Vyas Mohan) percent from 2016. They have also borrowed (( [email protected] ; +852 2843 liberally directly from banks. Foreign lenders’ 6587; Reuters Messaging: [email protected] )) China exposure grew 13 percent to hit a record high in the first half of 2017, Fitch Ratings says, to stand at $1.9 trillion. Most of that will not be in yuan. India If the local rout turns into a full-on crash, that could create problems for these markets. Indian bond yields fall after central Borrowers, seeing rates spike at home, would bank cancels open market sale of debt naturally seek to borrow more in foreign currencies. But they might struggle to find 20-Nov-2017 investors: most investors in Chinese dollar By Suvashree Choudhury and Swati Bhat bonds are also from the People’s Republic. If MUMBAI, Nov 20 (Reuters) - Indian bond yields stress is sustained, weaker issuers will struggle fell for the second straight day on Monday as to borrow in any currency, and start defaulting traders took comfort from the central bank's on offshore obligations first. That would be a far unexpected decision to cancel a scheduled bigger headache than 2015. sale of bonds via open market operation CONTEXT NEWS (OMO) post market hours on Friday. The bond market, which got a shot in the arm - Chinese sovereign bond yields have risen throughout 2017. Stress increased sharply in on Friday after Moody's upgraded India's November as regulators signalled tighter sovereign rating pared almost all the gains on restrictions on lending and on the asset that day, resumed the rally on Monday boosted management industry. by the cancellation of OMO sale which to traders - As of Nov. 24, the benchmark 10-year Chinese was a signal that the central bank was not treasury bond was yielding more than 4 percent, happy with high yields. the highest level since 2014. Yields on bonds The Reserve Bank of India said on Friday it from semi-sovereign issuers also rose, with the was withdrawing the OMO sale that was China Development Bank's 10-year bond trading scheduled for Nov. 23 due to "recent market developments and based on a fresh review of at nearly 5 percent. the current and evolving liquidity conditions". - The finance-heavy CSI300 stock index dropped "It is definitely a yield signal even if they say 3 percent on Nov. 23, its worst daily fall since that it is due to evolving liquidity situation June 2016. because no drastic change has happened in - The People's Bank of China shifted from liquidity," said the chief dealer at a large state- draining short-term funds from money markets run bank. on a net annual basis to injecting them in the "We have always been saying there is no reason week ended Nov. 17. It has injected a net $75 for bonds to be so negative as fiscal slippage is billion through open market operations this year unlikely to be very high and inflation won't shoot as of Nov. 24. through the roof."

As of 0454 GMT, the benchmark 10-yr bond (Editing by Quentin Webb and Katrina Hamlin) (( [email protected] ; Reuters yield fell to as much as 6.92 percent, lowest Messaging: since November 10. It closed at 7.05 percent on [email protected] )) Friday. Meanwhile the rupee weakened to 65.11 to the dollar from the previous close of 65.02 as

the greenback gained on concerns of political China announces details of dim sum uncertainty Germany. bond sale due next Thursday Back home, the two-day bond rally has been a much-awaited relief for several investors who 24-Nov-2017 are sitting on large piles of losses after bond

PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 3 yields rose as much as 58 basis points since Chartered Bank. June-end as rate cut hopes waned on high "This should give further confidence to Indian inflation and potential fiscal slippages. corporates to raise dollar funds through the However, many traders expect this rally to fizzle international bond markets at the tightest out as concerns over rising inflation, hawkish ever spread in the last 10 years," he said. central bank rhetoric and fiscal discipline Foreign investment in India's domestic corporate resurfaces. debt has reached its ceiling under central bank- "How long and how much can the RBI signal on mandated limits, forcing those investors who bond yields? Eventually inflation will rise post want exposure to India to buy offshore. This had April to around 5 percent and then market will helped tighten spreads even before the upgrade. be expecting a rate hike," said a market State Bank of India 2024 bonds have come in to participant at a primary dealership. 120 bps over U.S. Treasuries from 126 bps over just before the Moody's upgrade and 147 bps (Editing by Sherry Jacob-Phillips; Editing by over in early 2017. Gopakumar Warrier) Seshagiri Rao, joint managing director of India's (( [email protected] ; JSW Group, a steel-to-energy company, said the twitter.com/swatibhat22; +91-22-61807353; Reuters ratings upgrade could help JSW potentially save Messaging: over $1 million annually on its borrowings. [email protected] )) Mahindra Group, which operates multiple

businesses from autos to information technology, might tap offshore markets too, said Moody's upgrade boosts already finance head V.S. Parthasarathy, adding "a small growing confidence in Indian debt one step upgrade by Moody's is a big step up for 22-Nov-2017 India's confidence." Refiles to clarify designation of Ken Hu from ATTRACTIVE PRICING Invesco in paragraph 14th Companies, including quasi-sovereign issuers •India debt demand already relatively strong that had already begun work on raising funds onshore, offshore offshore, such as Indian Railways Finance Corp •Upgrade perfect timing for Reliance and Power Finance Corp, are now speeding up Industries $800 mln offer the process, bankers said. •JSW Group says upgrade could save $1 State-controlled Hindustan Petroleum, might mln/yr in borrowing costs explore raising funds offshore next year, •Exhausted local debt quota for foreigners Chairman M.K. Surana said. aids offshore demand "Some institutional investors who are •Moody's raised sovereign rating first time in required to invest in investment-grade bonds nearly 14 years might not have been willing to buy India By Krishna Merchant and Suvashree Choudhury dollar bonds in the past as the Baa3 credit SINGAPORE/MUMBAI, Nov 21 (Reuters) - rating did not give them psychological comfort India's sovereign rating upgrade by Moody's margin in case of a downgrade," said Ken Hu, is a shot in the arm for Indian companies chief investment officer of fixed income Asia- looking to raise funds in offshore bond Pacific at Invesco. markets. The prior Baa3 rating was the lowest Driven by more attractive rates and relatively investment-grade level. strong economic fundamentals among emerging Lower-rated issuers could also benefit with some markets, offshore dollar borrowing by Indian bankers estimating their borrowing costs could companies has already risen 32 percent from the fall as much as 15 basis points in offshore dollar start of 2017 to $8.81 billion, according to markets. Reuters data. Still, Moody's upgrade may not be enough to The rating agency's decision on Friday to raise please all debt investors. India's credit assessment for the first time in "India's a good credit to have on the books for nearly 14 years to a notch higher than its rivals foreign investors," said a senior investment was perfect timing for billionaire Mukesh banker, who declined to be named as he is not Ambani's Reliance Industries, which announced authorised to speak to media. "However, much plans to raise $800 million offshore just days bigger traction among investors will happen only before. if at least one more rating agency upgrades The upgrade to Baa2 from Baa3 lifted Indian India." stocks, bonds and currency and helped Reliance price its notes at 130 basis points (Reporting by Suvashree Choudhury and Krishna (bps) over U.S. Treasuries on Tuesday, the Merchant of IFR: Additional reporting by Nidhi Verma, tightest ever spread for an Indian issue. Krishna Das and Neha Dasgupta in New Delhi, and Other companies are assessing if the narrowing Euan Rocha in Mumbai: writing by Suvashree Dey in Indian bonds yields over U.S. Treasuries will Choudhury; Editing by Neil Fullick) last with a view to raising fresh funds, say (( [email protected] ; +91- bankers and corporate finance heads. 22-61807223; Reuters Messaging: Markets have received the upgrade well, said [email protected] Jujhar Singh, managing director and head of et )) capital markets, South Asia at Standard

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- By Mitali Salian; [email protected]; +91-22- 61353300 Indian rupee swings up, bonds trim - Edited By Shreejay Sinha losses on market talk of S&P ratings - Send Feedback to [email protected] upgrade - Copyright (c) 2017 NewsRise Financial Research & Information Services LLP 23-Nov-2017 MUMBAI, Nov 23 (Reuters) - The Indian rupee rose sharply in late trade after moving in a narrow band for most of Thursday following India Bond Traders Expect Tepid market talk of a potential sovereign ratings Demand At Auction Post Switch upgrade by Standard & Poor's. 24-Nov-2017 The Indian rupee ended at 64.58 to the dollar By Dharam Dhutia after moving in a range of 64.5675-64.8900 NewsRise during the day, and compared with Wednesday's MUMBAI (Nov 24) -- India‟s weekly bond sale close of 64.92. likely to see tepid demand as sentiment The 10-year benchmark bond yield also cooled bearish after bond switch, traders say. RBI off from its highs and ended at 6.99 percent auctioning four government bonds worth after rising to 7.02 percent. It had closed at 6.96 INR150 billion including INR80 billion of 2031 percent on Wednesday. note. Other notes include those maturing in Speculation about a India ratings upgrade 2022, 2033 and 2051. “The yield of the 2031 surfaced after TV channel BTVI reported, citing note has shot up after the switch, so that may sources, that S&P will announce its rating review attract some state-run banks, but we won’t see on Friday. any major high price bids,” dealer at state-run In an email reply to Reuters, S&P said: "We bank says. Cutoff for 2031 bond pegged in never comment on speculation about our INR96.15-INR96.20 band; note now at ratings." INR96.24. “We may see participation from large Expectations that the other two international state-run insurance company for the 2051 note,” ratings agencies - S&P and Fitch - could also dealer adds. better India's sovereign rating sooner than later has been gaining steam after a surprise - By Dharam Dhutia; [email protected]; upgrade by Moody's last week. 91-22-61353308 - Edited By Mrigank Dhaniwala (Reporting by Suvashree Dey Choudhury; Editing by - Send Feedback to [email protected] Biju Dwarakanath) - Copyright (c) 2017 NewsRise Financial Research & (( [email protected] ; +91- Information Services LLP 22-61807223; Reuters Messaging: [email protected] et ))

Indonesia

India RBI Switches 100 Billion Rupees Indonesia sells 5.95 trillion rupiah of Of Bond Maturing In 2018-19 Islamic bonds 23-Nov-2017 21-Nov-2017 By Mitali Salian JAKARTA, Nov 21 (Reuters) - Indonesia's NewsRise finance ministry sold 5.95 trillion rupiah MUMBAI (Nov 23) -- The Reserve Bank of ($439.67 million) of Islamic bonds at an India, in consultation with the federal auction on Tuesday, above the indicative government, switched one security from its target of 5 trillion rupiah, its financing and portfolio maturing in 2018-19 and having a risk management office said. total face value of about 100 billion rupees to The weighted average yield for Islamic T-bills a longer-tenor paper maturing in 2031-32, the maturing in May 2018 was 5.02857 percent, central bank said in a notification today. higher than 4.99917 percent in the previous The transaction was conducted on Nov. 22 at the auction on Nov. 7. Fixed Income Money Market and Derivatives The project-based sukuk maturing in May 2019 Association of India (FIMMDA) prices, the central had a weighted average yield of 5.82993 bank added. percent, lower than the 5.87243 percent yield in India is aiming to switch or buy back this fiscal the last auction. year at least half of 1.52 trillion rupees of The weighted average yield for the project- government bonds that are due for redemption based sukuk maturing in May 2021 was 6.38618 in April 2018, a senior finance ministry official percent, down from 6.42000 percent in the had said on Nov. 10. previous auction. “We are trying to buy back as much of those The sukuk maturing in November 2031 had a bonds as possible. But if we are unable to buy weighted average yield of 7.37999 percent, back we will use the switch route,” the official, higher than the last auction's 7.37980 percent. who did not want to be identified, had told There were no winning bids for the project- NewsRise. based sukuk maturing in August 2023. Total incoming bids on Tuesday were 15.67 PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 5 trillion rupiah, up from 12.82 trillion rupiah in as Hariri suspends resignation the previous auction. 22-Nov-2017 The highest bid-to-cover ratio was 4.78 for the LONDON, Nov 22 (Reuters) - Lebanon dollar project-based sukuk maturing in May 2019. bonds gained across the curve while yield premia and credit default swaps fell on ($1 = 13,533 rupiah) Wednesday after Saad al-Hariri suspended his (Reporting by Nilufar Rizki; Editing by Amrutha decision to resign as prime minister, easing a Gayathri) major political crisis. (( [email protected] )( +6221 2992 7611) (Reuters Messaging: Many of the country's dollar bonds added around [email protected] )) a cent or more and were well on their way to recover most of the losses sustained since Hariri's shock resignation on Nov 4. The 2027 dollar issue chalked up the biggest Lebanon gains, adding 1.68 cents to trade at 94.25 cents. Meanwhile, the average yield spread of Lebanon Lebanon issues $1.7 bn eurobonds in sovereign dollar bonds over U.S. Treasuries fell debt swap with central bank by 9 basis points to 521 bps, their narrowest since Nov 6. Data from IHS Markit showed five- 20-Nov-2017 year CDS - the cost of insuring exposure to the BEIRUT, Nov 20 (Reuters) - Lebanon carried Lebanon's sovereign debt - fell 17 bps from out a debt swap with the central bank, issuing Tuesday's close to 549 bps. $1 billion through a 2031 eurobond with a

7.15 percent coupon rate and $700 million (Reporting by Karin Strohecker, editing by Mike Dolan) through a 2028 issue with a 7.00 percent (( [email protected] ; coupon rate, a finance ministry official told +442075427262; Reuters Messaging: Reuters on Monday. [email protected] )) The eurobonds were swapped for an equivalent amount of Lebanese pound T-bills from the central bank in a transaction that had been planned before Lebanon entered a political crisis Pakistan on Nov. 4 when Saad al-Hariri resigned as prime minister. Pakistan searches for new finance The Ministry of Finance said in a separate minister after Dar relieved of duties statement the exchange changed the composition, not the stock of debt, extending 23-Nov-2017 the maturity of 2 percent of total debt stock By Syed Raza Hassan by an average of 10.27 years. KARACHI, Pakistan, Nov 23 (Reuters) - Pakistan It said 40 percent of Lebanon's debt is now in on Thursday began searching for a new foreign currency and 60 percent in local finance minister a day after Ishaq Dar was currency, meeting the ministry's targets. relieved of his portfolio amid mounting The exchange also strengthened the central headwinds for the economy. bank's foreign currency reserves, the statement The departure of Dar, widely credited with said. navigating Pakistan out of a 2013 balance of Years of political problems in Lebanon have payments crisis, comes as the country is seeking prevented the government making necessary to raise in excess of $1 billion on debt markets reforms, leaving the central bank to play the key through a sukuk and a Eurobond in coming role in maintaining economic stability. months. Hariri's resignation more than two weeks ago The country is battling to stave off balance of from Saudi Arabia thrust Lebanon to the payments pressures due to dwindling foreign currency reserves and a widening current forefront of a regional struggle for influence account deficit in the $300 billion economy. between Saudi Arabia and Iran, and raised Among the names mentioned in local media as concerns for an economy that relies heavily on possible finance chiefs were Miftah Ismail, an remittances from Lebanese working in Gulf Arab economist who was until recently chairman of countries. the country's board of investment, and former The ministry said 2,562 billion Lebanese pounds finance minister Sartaj Aziz. worth of T-Bills were redeemed for the $1.7 Others have speculated that Prime Minister billion in eurobonds. The T-Bills had maturity Shahid Khaqan Abbasi might run the finance dates between 2018 and 2025, and around portfolio himself until the next general election, 2,000 billion pounds were due to mature over likely in August 2018. the next two years. Abbasi on Wednesday granted indefinite leave to

Dar, who is receiving treatment in London for a (Reporting by Lisa Barrington; Editing by Toby Chopra) (( [email protected] ; +961)(0)( heart condition. A warrant has been issued for 1954456; )) his arrest after he missed several court appearances on corruption charges that he had amassed wealth beyond his known sources of Lebanon's dollar bonds gain, CDS fall income. Dar has denied all charges, as has former prime PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 6 minister Nawaz Sharif, who also faces corruption (Reporting by Ina Zhou; Editing by Steve Garton) cases after being ousted by a court in July in (( [email protected] ; +852 29126674; what his supporters call a political vendetta Reuters Messaging: engineered by opposition leaders and elements [email protected] )) of the powerful military. The case against Dar had, along with Pakistan's worsening economic outlook, led to mounting Philippines posts $431 mln budget calls for him to resign. deficit in Oct "Dar's exit was expected for over a week now, 22-Nov-2017 and there were already indications other people MANILA, Nov 22 (Reuters) - The Philippine in the government were looking at aspects government had a budget deficit of 21.8 related to finance," said Saad Hashemy, chief billion pesos ($431 million) in October, much economist for Topline Securities Pvt. wider than the gap one year earlier, according "The prime minister and a few other people were to a government document seen by reporters taking care of economy-related matters." on Wednesday. Whoever runs the finance ministry, few expect it The October deficit brought the shortfall in the to stray from Dar's commitment to a stable first 10 months of 2017 to 234.9 billion pesos, or rupee, which has been endorsed by Abbasi. 49 percent of this year's deficit target. The ruling Pakistan Muslim League-Nawaz (PML- N) party has been reluctant to allow the rupee to ($1 = 50.6250 Philippine pesos) weaken ahead of looming elections as it may (Reporting by Karen Lema; Editing by Richard Borsuk) stoke inflation, though many investors and (( [email protected] ; +632 841- 8938; Reuters Messaging: economists say the move is needed to shore up [email protected] )) lagging exports. Fawad Khan, head of research at BMA Capital, said Dar's departure might give some investors pause ahead of the Eurobond and sukuk Saudi Arabia offerings. "It is possible that some people might not Saudi state budget deficit shrinks participate in the process or demand a high nearly 10 pct in third quarter yield," Khan said. 19-Nov-2017 (Writing by Kay Johnson, Edited by William Maclean) By Andrew Torchia (( [email protected] ; +93-79-007- DUBAI, Nov 19 (Reuters) - Saudi Arabia's state 2137 in Afghanistan; +92-300-856-6702 in budget deficit shrank nearly 10 percent from a Pakistan;)) year earlier in the third quarter of 2017, keeping the government on track to meet its

full-year target for strengthening its finances, official data showed on Sunday. Philippines Revenue climbed 11 percent to 142.1 billion riyals ($37.9 billion) in the quarter while Philippines mandates BOC for Panda spending increased 5 percent to 190.9 billion bonds riyals. That left a deficit of 48.7 billion riyals, down about 9.5 percent from a year ago. 20-Nov-2017 The government is working to eliminate a By Ina Zhou deficit caused by low oil prices, and until the HONG KONG, Nov 20 (IFR) - The Republic of gap can be closed, Riyadh is being forced to the Philippines signed an agreement with borrow heavily and draw down its foreign Bank of China last week for a planned reserves. Rmb1.4bn(US$211m) Panda bond issue in For the first nine months of this year, the deficit China's interbank bond market. totalled 121.5 billion riyals, down 40 percent Bank of China has been appointed lead year-on-year. That suggests the government is underwriter and sole bookrunner on the likely to achieve its target of a 198 billion riyal proposed offering, according to a press release deficit this year, down from last year's actual by the Chinese lender. deficit of 297 billion riyals. The agreement was signed during Chinese Non-oil revenue jumped 80 percent year-on- Premier Li Keqiang's visit to the Philippine capital year to 47.8 billion riyals in the third quarter. Manila after he attended a series of meetings The finance ministry said this showed Riyadh's including the 12th East Asia Summit last week. economic reforms, which aim to cut its reliance In late September, Philippine officials visited on oil income, were feasible; among other steps, China to pitch a planned offering of renminbi the government imposed a tax on tobacco and Panda bonds and to discuss investment sugary drinks in June. opportunities in the country’s infrastructure But the success in cutting the deficit has come projects. at a high cost to the economy. Austerity Standard Chartered Bank has also been hired as measures pushed the economy into recession in joint lead arranger on the Panda offering, the second quarter of 2017, and have deterred according to market sources. the private investment which the government

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needs to develop non-oil industries. As a result, sources briefed by finance South Korea to sell 4.6 trln won T- ministry officials told Reuters early this month that the government planned to push back the bonds in December target date for eliminating the deficit entirely 23-Nov-2017 to 2023 from 2020. SEOUL, Nov 23 (Reuters) - South Korea plans The introduction of a 5 percent value-added tax to sell 4.6 trillion Korean won ($4.24 billion) is to go ahead on schedule in January but some worth of treasury bonds through auctions in other revenue-raising steps, such as domestic December, less than 5.35 trillion won worth fuel price rises, are being delayed. planned for November, the finance ministry said on Thursday. (Reporting by Andrew Torchia; Editing by Adrian Croft) The Ministry of Strategy and Finance also said it (( [email protected] ; +9715 6681 would buy back 0.5 trillion won worth of 7277; Reuters Messaging: treasury bonds ahead of maturity in December. [email protected] )) It will also exchange 100 billion won worth of

existing paper with new debt.

S&P says ratings on Saudi Arabia ($1 = 1,085.9800 won) affirmed at 'A-/A-2'; outlook stable (Reporting by Dahee Kim) (([email protected]; +82 2 3704 19-Nov-2017 5643; Reuters Messaging: Nov 19 (Reuters) - [email protected])) S&P says ratings on saudi arabia affirmed at 'A-/A-2'; outlook stable. S&P says stable outlook is based on expectation that the Saudi authorities will Sri Lanka continue to take steps to consolidate public finances. Sri Lanka PM appears before bond S&P says stable outlook also based on probe panel expectation that Saudi authorities will maintain government liquid assets close to 100% of GDP 20-Nov-2017 over the next two years. By Shihar Aneez S&P says affirmed its 'A-/A-2' unsolicited long- COLOMBO, Nov 20 (Reuters) - Sri Lankan Prime and short-term foreign and local currency Minister Ranil Wickremesinghe appeared sovereign credit ratings on the Kingdom of Saudi voluntarily before a panel investigating alleged irregularities in government bond Arabia. sales on Monday to clear his name.

It marked the first time a Sri Lankan prime (( [email protected] ;)) minister has appeared before an investigation panel and responded to questions raised by the Attorney General's Department. South Korea Appointed by President Maithripala Sirisena after demands from opposition lawmakers, the panel South Korea's Q3 short-term external has been looking into a 2015 central bank bond deals that some government critics said raised debt burden hits record 31.1 pct government borrowing costs. 23-Nov-2017 Sirisena has vowed to punish those responsible SEOUL, Nov 23 (Reuters) - South Korea's ratio of if there is any irregularities in the bond sale. The short-term external debt to foreign exchange panel will submit its finding to Sirisena next reserves touched a record 31.1 percent by month. end-September from 30.8 percent three Wickremesinghe, during an hour of months ago, data showed on Thursday. questioning, said he requested the then Short-term external debt rose to $119.8 billion by end-September from $117.3 billion at the end of June, central bank chief hold a new public Treasury the Bank of Korea said, leaving the economy slightly bond auction after finding gray areas in the more vulnerable to potential financial shocks. previous government's borrowing. The increase in external debt was mainly due to higher "Trillions of rupees have been taken without any bond issuance by depository institutions as offshore authority. Many borrowings did not appear on demand grew, the finance ministry said in a separate government books," he said adding that up to statement. 100 billion rupees ($650.62 million) had been borrowed for highways without being included in (Reporting by Cynthia Kim; Editing by Sherry Jacob- government books. Phillips) (( [email protected] ; 822 3704 The auction, originally intended to sell 1 billion 5655; Reuters Messaging: rupees ($6.51 million) of 30-year bonds, [email protected] )) eventually grew to over 10 times that amount to meet government borrowing needs. More than half of the issue was sold to Perpetual Treasuries, a subsidiary of a company owned by the son-in-law of former central bank governor

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Arjuna Mahendran, whom Wickremesinghe had appointed. Wickremesinghe, Perpetual Treasuries, Bosnia Mahendran and his son-in-law have all denied any wrongdoing. Wickremesinghe's supporters IMF says Bosnia must carry out stalled also say there was nothing wrong with the sale. reforms to keep loan programme Wickremesinghe, prime minister since January 21-Nov-2017 2015, said the additional amount was needed for •Bosnia must complete key reforms to keep highways payments and was not included in IMF programme government books under the previous regime. •Tentative deadline for reforms is end of The auction system, instead of private December placement, was introduced to ensure •IMF sees Bosnia's growth in 2017 at 2.5 pct transparency. By Daria Sito-Sucic and Maja Zuvela Opposition lawmakers have said the bond SARAJEVO, Nov 21 (Reuters) - The auction in question lost the state more than $1 International Monetary Fund (IMF) warned billion because of rising borrowing costs. But the Bosnia on Tuesday it must meet the terms of central bank has dismissed the opposition's its loan arrangement with the lender to unlock claims. further payouts to help boost economic Political analysts have suggested that opposition growth and job creation. lawmakers have been trying to discredit The IMF halted the 550 million euro ($645 Wickremesinghe's anti-corruption policies and million) stand-by loan programme in February create a rift in the coalition government formed after Bosnian authorities failed to carry out in 2015 by Sirisena's centre-left party and economic reforms agreed in November last year. Wickremesinghe's centre-right party. A tentative deadline for the authorities to make the required reforms, enabling the lender to ($1 = 153.7 rupees) complete its first review under the deal, is the (Reporting by Shihar Aneez; Editing by Nick Macfie) end of December, when an IMF team should (( [email protected] ; +94-11-232- take its report on economic development in 5540; Reuters Messaging: [email protected] twitter: Bosnia to its executive board in Washington. https://twitter.com/shiharaneez) ) The programme is part of a wider reform package devised by the European Union to guide the Balkan country towards faster integration with the bloc. EUROPE "You are at the crossroads right now, you have to decide what you want to do and the way you

want to go," Nadeem Ilahi, the head of an IMF Albania team that completed a two-week visit to Bosnia on Tuesday, said in an interview. Bosnia's two autonomous regions have made Albania to sell 1 bln leks (7.4 mln euro) progress on structural reforms, but of 7-yr T-notes implementation of key measures "has been 23-Nov-2017 much slower than expected", the IMF said in a TIRANA (Albania), November 23 (SeeNews) - statement. Albania's finance ministry will offer 1 billion The Serb Republic and the Bosniak-Croat leks ($8,7 million/7.4 million euro) of seven- Federation must adopt 2018 budgets, while the year fixed-rate Treasury notes at an auction central parliament has to pass a law raising on December 4, the country's central bank has taxes on fuel and another law on deposit announced. insurance, it said. The government securities will mature on June Political bickering in the ethnically divided 1, 2024, according to an auction notice posted country has prevented the passage of the fuel on the website of Bank of Albania. tax law, which is required to unlock "the largest At the last auction of seven-year T-notes held on package of external financing available in recent September, the central bank sold 1.5 billion leks times for critical public infrastructure worth of government paper, on target. The investments", according to the statement. coupon rate edged down to 5.24%, from 5.39% "You are looking at a potential game-changer for in the previous auction of of seven-year this country in terms of getting on a different government securities held in May. growth path," Ilahi told Reuters. He said the IMF had projected 4 percent growth (1 euro = 132.358 leks) for the economy in the medium term, assuming Copyright 2017 SeeNews. All rights reserved. the reforms take place. Without reforms, growth is expected to be significantly lower at about 2.5 percent, which is also the lender's growth estimate for Bosnia this year. Ilahi also said the Federation must take steps to ensure due diligence is carried out on the region's two state-owned telecoms firms, which without restructuring may pose a fiscal PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 9 constraint on the budget. currency will mature on Nov. 27, 2023. The IMF distributes the loan payments to The finance ministry aims to refinance a seven- Bosnia's central government in Sarajevo, but the year domestic bond worth 4.0 billion kuna ($625 country's two autonomous regions are the million) with a coupon of 6.25 percent which principal beneficiaries of the aid. matures in two days. They have factored the aid into their respective budgets but as the IMF cash has been frozen, ($1 = 6.3986 kuna) both regions have had to resort to issuing (Reporting by Igor Ilic; Editing by Toby Chopra) domestic debt to cover the budget gap and (( [email protected] ; +385 1 4899 970; finance maturing debt. mobile +385 98 334 053; ))

($1 = 0.8522 euros) (Reporting by Maja Zuvela and Daria Sito-Sucic; Croatia to issue six-year domestic bond Editing by Susan Fenton and Mark Potter) 23-Nov-2017 (( [email protected] ; +387 33 295 485; Reuters Messaging: ZAGREB (Croatia), November 23 (SeeNews) - [email protected] )) Croatia's finance minister, Zdravko Maric, said on Thursday the government is set to issue a six-year bond on the domestic market to finance maturing obligations. Croatia Croatia will use the proceeds from the new bond issue to refinance a seven-year kuna- Croatia to issue new six-year local denominated bond maturing in a few days, Maric said during a news conference in Zagreb bond following a weekly government session. 21-Nov-2017 Further details on the planned new bond issue ZAGREB, Nov 21 (Reuters) - Croatia is will be made public shortly, Maric noted. preparing to issue a new local bond which will After an auction held this week, Croatia's total mature in 2023, one of the arrangers said on treasury bill debt amounts to 18.045 billion kuna Tuesday. ($2.8 billion/2.4 billion euro), according to data "Books will open on Nov. 23, 2017, at 0800 published on the website of the finance ministry. GMT," it said. Last week, Croatia placed a 2030 bond worth The bond is arranged by four leading local 1.275 billion euro ($1.5 billion) on the banks. international market. Croatia has to refinance a local bond worth 4.0 billion kuna ($619.79 million) which matures on (1 euro=7.57634 kuna) Nov. 25, 2017. Copyright 2017 SeeNews. All rights reserved. The new issue will also be denominated in the national kuna currency. Sometimes, the finance ministry also issues paper denominated in euros. Croatia raises 5.8 bln kuna (766.9 mln According to some market participants, the euro) in 2023 domestic bond new issue could be somewhat higher than the 24-Nov-2017 maturing one. ZAGREB (Croatia), November 24 (SeeNews) - Last week Croatia tapped the international Croatia has successfully placed a 2023 bond markets with a new bond aimed at refinancing worth 5.8 billion kuna ($909.5 million/766.9 the debts of the state-owned road management million euro) on the domestic market on companies. Thursday, the finance ministry said. Croatia has undertaken a significant fiscal The government securities were placed at a yield consolidation in the last two years cutting the of 1.80% and with a coupon of 1.75%, the budget gap to below one percent of gross ministry said in a statement late on Thursday. domestic product from above five percent. The order book opened and closed within a day but due to strong investor interest demand was ($1 = 6.4538 kuna) double the final issued amount, it added. (Reporting by Igor Ilic, Editing by William Maclean) Croatia will use the proceeds from the new bond (( [email protected] ; +385 1 4899 970; issue to refinance a seven-year kuna- mobile +385 98 334 053; )) denominated bond maturing in a few days and a

part of its treasury bill debt. Last week, Croatia placed a 2030 bond worth Croatia opens books for new local bond 1.275 billion euro ($1.5 billion) on the 23-Nov-2017 international market. ZAGREB, Nov 23 (Reuters) - Croatia has opened books for a six-year domestic bond (1 euro=7.56319 kuna) which will be issued on Nov. 27, one of the Copyright 2017 SeeNews. All rights reserved. arrangers said on Thursday. "The books are expected to be closed later on Thursday," it said. The bond denominated in the national kuna PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 10

and the peak of 44.9 percent in 2013. The 2017 debt forecast puts the country fourth Czech Republic in the EU among those with the lowest debt, behind Estonia, Luxemburg and Bulgaria. The Czechs to auction up to CZK 12 bln European Commission's latest forecast puts the worth of bonds in December EU average public debt at 83.5 of GDP percent this year. 20-Nov-2017 The ministry also raised its 2017 growth forecast PRAGUE, Nov 20 (Reuters) - The Czech Finance to 4.1 percent from previous 3.1 percent, and Ministry will offer up to 12 billion crowns the 2018 outlook to 3.3 percent form 2.9 ($553.02 million) worth of domestic government bonds in three primary auctions percent. taking place in December, the ministry said on Monday. (Reporting by Jan Lopatka; Editing by Richard The ministry also confirmed the maximum Balmforth) (( [email protected] ; expected nominal value of bonds sold in auctions +420224190474; Reuters Messaging: in the fourth quarter is planned at 60 billion [email protected] )) crowns. The ministry said it was not planning any short- term Treasury bill auctions for December, but that it could sell short-term debt depending on Hungary the situation. It also confirmed the expected nominal value of T-bills sold in the fourth quarter Hungarian central bank provides EUR is 50 billion crowns excluding roll-over. 240 mln worth of 12-month fx swaps

($1 = 21.6990 Czech crowns) 20-Nov-2017 (Reporting by Mirka Krufova; Editing by Robert Muller) BUDAPEST, Nov 20 (Reuters) - Hungary's (([email protected])(+420 224 central bank accepted bids worth 240 million 190 477)(Reuters Messaging: euros ($282.53 million) for its 12-month swap [email protected])) facility, which provides forint liquidity in return for euros, it said on Monday on its

page. Czech government sees bigger fiscal Banks submitted bids worth 621 million euros for the 12-month facility. The central bank also surpluses, debt fall each year until provided 80 million euros worth of 1-month 2020 swaps, and 80 million euros worth of liquidity via 20-Nov-2017 3-month swaps to banks. PRAGUE, Nov 20 (Reuters) - The Czech Republic will post a bigger fiscal surplus this ($1 = 0.8495 euros) year and every year until 2020 than (Reporting by Sandor Peto) previously expected, helping reduce (( [email protected] ; +36 1 327 government debt toward 30 percent of gross 4744; Reuters Messaging: domestic product, the Finance Ministry said on [email protected] ))

Monday. The EU member has enjoyed strong economic growth in the past three years, touching 5 Hungary central bank says ready to percent in the third quarter, which has filled buy longer-maturity mortgage bonds state coffers. 21-Nov-2017 Record low interest rates, measures to cut tax BUDAPEST, Nov 21 (Reuters) - The National avoidance, better treasury management and Bank of Hungary is ready to buy mortgage slower investments have also helped the budget, bonds of maturities at 10 years or more if expected to end up in a surplus for the second banks issue such notes as part of the NBH's year in a row in 2017. efforts to loosen monetary conditions on the The central budget and other public sector longer end of the yield curve, a top central segments - mainly local budgets, national banker said on Tuesday. health insurance and others - will send the Its separate new interest rate swap programme public sector to the EU's highest surplus this can also be fine tuned if the market demands year of 1.1 percent of GDP, the ministry said warrant changes, central bank Vice Governor in a quarterly update of its forecasts. Marton Nagy told a news conference. Surpluses will grow to 1.7 percent in 2020, it said. (Reporting by Krisztina Than and Marton Dunai) The surpluses are markedly higher than those (( [email protected] ; +36-1-327-4742; forecast in the previous outlook in July, which https://twitter.com/mdunai; Reuters Messaging: saw 0.7 percent this year and 0.5 percent for [email protected] )) 2020. Public sector debt will keep falling to 30.9 percent of GDP in 2020, the ministry said, from an improved outlook of 34.7 percent this year

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This would force either a cut in spending, tax hikes, or a violation of the constitution, it said. Macedonia Balcerowicz, the main author of the economic transition from communism to market economy, Macedonia to sell 650 mln denars (10.5 has criticised the PiS party for measures which mln euro) of 15-yr T-bonds have made firms more uncertain about the future and for increasing the role of the state in 20-Nov-2017 the economy. SKOPJE (Macedonia), November 20 (SeeNews) - The finance ministry expects public debt to Macedonia will offer 650 million denars ($12.4 rise to 51.7 percent of gross domestic product million/10.5 million euro) worth of 15-year this year from 48.8 percent in 2015, according Treasury bonds on November 21, according to to local methodology. data posted on the website of the central This still compares favourably with nearly 90 bank, NBRM. percent average level in the euro zone. The issue carries a coupon of 3.80%, NBRM said FOR said Poland's rise in public debt from 2015 in a statement on its website. to 2017 will likely be among the highest in the NBRM will sell the government securities on EU. behalf of the finance ministry through a volume Poland has a debt threshold of 60 percent tender, in which the price and coupon are fixed written into the constitution, which if in advance and primary dealers bid only with breached would trigger painful economic amounts. adjustment. The eurosceptic PiS party, in power since late Copyright 2017 SeeNews. All rights reserved. 2015, has sharply raised public spending and

reversed a hike in the retirement age, but managed to keep the deficit in check, partly Poland thanks to a crackdown on tax evasion, which led to a jump in tax receipts. Poland's economy grew by 4.7 percent in the Poland's finance ministry places 300 third quarter, the fastest pace in more than five mln euros worth of Eurobonds years, benefiting from robust consumption 21-Nov-2017 growth and a pick-up in investment after a WARSAW, Nov 21 (Reuters) - Poland's finance prolonged slump. ministry said on Tuesday it sold 300 million Unemployment fell to a record-low of 6.6 euros ($351.96 million) worth of two-year percent in October, the finance ministry has Eurobonds in a private placement. estimated, driving corporate wage growth up to The ministry said in a statement it sold the about 7 percent year-on-year, its highest level in bonds at a price of 100.723 percent of nominal over five years. value. The bonds' floating rate, based on Euribor plus 45 basis points, will be paid quarterly. (Reporting by Marcin Goettig; Editing by Richard Barclays Bank organised the placement. Balmforth) (( [email protected] ; ($1 = 0.8524 euros) +48226539720; Reuters Messaging: (Reporting by Lidia Kelly) [email protected] )) (( [email protected] ; +48 22 653 9722; trademarks or trademarks of the Thomson Reuters Reuters Messaging: group of companies around the world. [email protected] ))

Poland sells 4.0 bln zlotys worth of High spending may expose Poland to bonds at tender painful fiscal adjustment 23-Nov-2017 22-Nov-2017 WARSAW, Nov 23 (Reuters) - Poland sold WARSAW, Nov 22 (Reuters) - Poland's treasury bonds worth a total of 4 billion zlotys unwillingness to curb high spending leaves it ($1.12 billion) at a tender on Thursday, exposed to a sharp fiscal adjustment if there attracting investor demand worth 13.8 billion is a deep slowdown in its main export market zlotys, the finance ministry said. Europe, a Polish think tank said on The sale included 460 million zlotys in paper due Wednesday. July 2020, 978 million in bonds due November The Civic Development Forum (FOR) led by ex- 2022, 753 million zlotys in bonds due January deputy premier Leszek Balcerowicz, a liberal 2023, 870 million in papers due July 2027, 943 economist and opponent of the ruling Law and million in bonds due May 2028. Justice (PiS) party, said Poland's public debt The ministry said it would not carry out a could near a constitutional limit, which would supplementary tender on Thursday. force a painful adjustment. "In the event of 1-2 years of sharp slowdown ($1 = 3.5560 zlotys) (abroad), Poland's public debt will come (Reporting by Marcin Goettig) dangerously near the constitutional threshold (( [email protected] ; of 60 percent," FOR said. +48226539720; Reuters Messaging: [email protected] )) PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 12

bonds, yield drops

21-Nov-2017 Romania BELGRADE (Serbia), November 21 (SeeNews) – Serbia's finance ministry said on Tuesday it sold its entire offer of 50 million euro ($58.6 Romania sells planned 200 mln lei (43 million) of five-year euro-denominated mln euro) of 2021 T-notes Treasury notes. 20-Nov-2017 The yield came in at 2.38%, down from 2.60% BUCHAREST (Romania), November 20 at the last auction of five-year euro T-notes held (SeeNews) - Romania sold on Monday 200 on July 20, the ministry said in a statement. million lei ($51 million/43 million euro) worth of Treasury notes maturing on June 11, 2021, (1 euro = 118.785 dinars) in line with target, central bank data showed. Copyright 2017 SeeNews. All rights reserved. The average accepted yield was 3.68%, up from

2.31% achieved at the last auction of government securities from the same issue held Slovakia in May, the data indicated. Demand for the T-notes, which carry an annual coupon of 5.95%, was 435 billion lei on Slovaks raise 2037 bond sale to EUR Monday, compared to 1.7 billion lei in the May 106.5 mln after top-up round auction. 20-Nov-2017 The issue will be reopened on Tuesday when the BRATISLAVA, Nov 20 (Reuters) - Slovakia sold finance ministry hopes to raise 30 million lei in a 106.5 million euros ($125.43 million) worth of non-competitive tender. 1.875 percent state bonds due in March 2037 Romania's finance ministry plans to auction in competitive and non-competitive rounds of 2.7 billion lei worth of government securities at an auction on Monday, the finance and to sell an additional 330 million lei in non- ministry's Debt and Liquidity Management competitive offers in November. Agency (ARDAL) said. The ministry rejected all bids placed in six The bid/cover ratio was 4.803 in the competitive auctions of government securities last month. round, compared with 3.16 in the previous sale The ministry originally planned to raise 2.44 in September. billion lei last month. At the end of October, Romania's finance ($1 = 0.8491 euros) ministry said it had a comfortable funding buffer (Reporting by Tatiana Jancarikova; Editing by Jason and a plan to meet the country's financing needs Hovet) for the rest of the year, despite the failed (( [email protected] )( +420 224 190 477) (Reuters Messaging: auctions last month. [email protected] )) The ministry added that it has rejected the offers placed by the primary dealers in October amid a temporary rise in money market interest rates, which has also Turkey influenced yields on government securities. The ministry also said that it has largely covered the financing needs forecast for the year, by Turkish sovereign and bank bonds slide 'prudently' implementing the 2017 funding plan as political pressure rises through uniform distribution of borrowing 21-Nov-2017 throughout the year in order to avoid LONDON, Nov 21 (Reuters) - Turkish sovereign accumulation of very high funding needs over and bank dollar-denominated bonds fell short periods of time. across the curve on Tuesday with some issues So far this year, the ministry has sold some 38 trading at multi-month lows, hit by worries billion lei and 340 million euro worth of about government pressure on the central government bills and bonds and has tapped bank and worsening relations with the United foreign markets for 2.75 billion euro of 2027 and States. 2035 Eurobonds. Turkey's 2030 sovereign issue was down around The ministry has said it planned to sell some 48- 0.7 cents according to Tradeweb, trading at its 50 billion lei worth of leu-denominated domestic lowest level since March. debt this year. The selloff was broad-based, pushing up the average yield spread of Turkish sovereign (1 euro=4.6469 lei) dollar bonds over U.S. Treasuries by 6 basis Copyright 2017 SeeNews. All rights reserved. points (bps) to 339 bps, also the widest level since March. Turkish banks' dollar bonds slipped as well, as investors fear possible U.S. fines on some of the Serbia country's lenders as Turkish gold trader Reza Zarrab prepares to stand trial in the U.S. Serbia sells 50 mln euro of 5-yr T- Amongst the worst hit was Halkbank, whose February 2021 issue fell 0.65 cents according to

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Tradeweb, to trade at its lowest level since years led to disaster-related increases of 5%- March. 20% of general governmental expenditures. Garanti Bank's September 2022 dollar bond was Governments have tended to rely on down 0.3 cents to its lowest since April and contingency reserves, credit lines and bond Vakiflar's November 2022 dollar bond was down issuance to finance repair- and 0.4 cents to its lowest since March. reconstruction-related outlays. However, these options depend on market access and favorable (Reporting by Claire Milhench; editing by Marc Jones) concessions. Raising taxes has been necessary (( [email protected] ; +44)(0)( in some cases. 207 542 3571; Reuters Messaging: If natural catastrophes become more common [email protected] )) and costly, other loss mitigation techniques may egistered trademarks or trademarks of the Thomson be prudent, including sovereign catastrophe Reuters group of companies around the world. insurance, contingency reserves and fostering

private sector insurance. While these create recurring budget expenditures for premiums, LATIN AMERICA AND capital contributions to funds, and premium subsidies for private-sector insurance, the costs CARIBBEAN of such programs are often only a small share of

current spending and a fraction of disaster- related recovery costs. Fitch: Rising Lat Am, Carib Catastrophe Costs Pose Fiscal Risks Media Relations: Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: 20-Nov-2017 [email protected]. NEW YORK, November 20 (Fitch) The fiscal risk Additional information is available on of natural disasters to sovereign credits in www.fitchratings.com Latin America and the Caribbean (LAC) is rising, Fitch Ratings says. While credit ratings already incorporate a significant degree of catastrophe risk, sovereigns remain exposed to Argentina large-tail risk events. As these are expected to become more frequent and more devastating Argentina says Oct primary deficit going forward, we believe that catastrophe risk shrank to $1.84 bln management strategies could become more widespread. 21-Nov-2017 Economic losses from natural catastrophes in BUENOS AIRES, Nov 21 (Reuters) - Argentina's the region have gradually increased over the primary deficit shrank 47 percent versus the last 50 years due to climate changes and same month last year to 32.49 billion pesos greater economic development and ($1.84 billion), the economy ministry said in a urbanization, which have increased the value statement on Tuesday, citing a reduction in of property at risk. As climate change and government spending. economic development continue, these events (Reporting by Hugh Bronstein are likely to become more powerful and Editing by Chizu Nomiyama) frequent. Economies exposed to windstorms and earthquakes are especially vulnerable, as are those that rely on drought-prone agribusinesses, Barbados including Argentina, Brazil Paraguay and Uruguay, or that have high economic risk IMF Staff Completes 2017 Article IV concentrations, such as the Panama Canal Zone, Mission to Barbados tourism facilities in the Caribbean, etc. Ratings have been partially insulated from 22-Nov-2017 natural disasters because the period of impact is November 22, 2017 typically shorter than the ratings' forecast End-of-Mission press releases include horizon. In addition, the rating level already statements of IMF staff teams that convey incorporates a degree of catastrophe risk via preliminary findings after a visit to a country. variables that capture fiscal resilience to shocks The views expressed in this statement are those generally, as well as through the legacy costs of of the IMF staff and do not necessarily represent past events. Therefore, the incidence of the views of the IMF's Executive Board. Based disaster-driven ratings actions is low. on the preliminary findings of this mission, staff Nevertheless, the fiscal costs of catastrophes will prepare a report that, subject to can be substantial and more difficult to manage management approval, will be presented to the for lower rated credits. For large and IMF's Executive Board for discussion and diversified economies, the increase in general decision. government spending attributable to recovery •Continued strong growth in long-stay tourism and reconstruction has ranged from 0.1% to has supported Barbados' economic growth, but 0.6%. The hurricanes that hit Jamaica and fiscal consolidation is contributing to a several Central American countries in recent slowdown. PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 14

•The adjustment strategy should focus on decisively place the debt on a downward addressing the high transfers, containing other trajectory. Given the urgency in addressing current expenditures and maintaining a strong funding, balance of payment risks, the high revenue effort. debt, and the limited policy options, the fiscal •Urgent structural reforms are needed to adjustment must continue, with a focus on support growth and improve the business accelerating SOEs' reforms to facilitate a climate for domestic and foreign investment. significant and durable reduction in transfers. An International Monetary Fund (IMF) team led Staff recommend that the government seeks to by Judith Gold, visited Barbados during increase the primary surplus from the 4.4 November 7-21 to conduct the 2017 Article IV percent of GDP expected in FY2018/19 to 7.5 Consultation discussions. At the conclusion of percent of GDP by FY2020/21, corresponding to the visit, Ms. Gold issued the following an overall budget close to balance. The sizable fiscal adjustment would put the debt-to-GDP statement: ratio on a clear downward path toward debt 'Continued strong growth in long-stay tourism sustainability. has supported Barbados' economic growth, but 'The adjustment strategy should focus on the fiscal tightening is contributing to a addressing the high transfers, containing other slowdown. Following last year's improved current expenditures and maintaining a strong performance of 1.6 percent, real growth is revenue effort. Reforms of state owned projected to slow to 0.9 percent for the year, enterprises should include improved reflecting ongoing fiscal consolidation efforts. management, cost recovery, reduced services, Long-stay tourist arrivals continue to expand at mergers, closures, and privatization. Containing a healthy pace. Inflation is projected to rise by other current expenditures including the wage year end to 5.5 percent, from 3.6 percent at bill and government pensions is also critical. Tax end-2016. While credit growth remains subdued, policy should be reviewed with a view to financial soundness indicators suggest a broadening the tax base and improving its relatively healthy banking sector. progressivity, while efforts to strengthen tax 'Although the current account balance is administration must continue. Further, arrears improving, net international reserves (NIR) to the private sector should be cleared, and have fallen further. The current account deficit remaining current should be a government narrowed to 4.4 percent of GDP in 2016, and it priority. A concentrated effort to improve is expected to narrow further in 2017, as non-oil implementation capacity, including by providing imports fall in response to the May 2017 budget clear direction and clarifying expectations, is measures. However, NIR continue to decline as government debt service exceeds new also needed. In this regard, staff commend the funding, and private foreign inflows remain authorities' intention to shortly enact a new weak. At end-September, NIR stood at B$550 Financial Management and Audit Act, which million. could help address some of the implementation 'Fiscal performance in FY2016/17 improved but gaps. the deficit remains large. The fiscal deficit 'Structural reforms to support growth and declined more than anticipated in FY2016/17 to improve the business climate for domestic and 5.5 percent of GDP reflecting improvement in foreign investment are also urgent. These revenue performance, including one-off factors reforms would aim to improve business and lower current expenditure. Central processes, such as significantly reducing government debt increased to 137.1 percent clearance times for immigration and customs, of GDP, up from 134.7 percent in FY2015/16 accelerating approval of building permits, and and 99.4 percent of GDP in FY2011/12. streamlining legal procedures. Staff welcomes Excluding NIS holdings, central government progress in formulating the Barbados debt was 101 percent of GDP in FY2016/17. Sustainable Recovery Program (BSRP), which is 'With the growing financing challenges and being drafted in consultation with the Social falling reserves, the government introduced an Partnership, and encourages the authorities to ambitious budget on May 30, 2017 aimed at continue to closely collaborate to develop a significantly reducing the fiscal deficit and consensus on a strategy for reform. shoring up international reserves. However, 'The IMF stands ready to assist the Government exemptions to the NSRL, lower-than-expected of Barbados, including through continued policy non-oil imports, shortfalls in some other dialogue and technical assistance. The team revenues, and high transfers indicate that the would like to thank the authorities, technical government is likely to fall short of its target. staff, representatives of civil society, and the Staff estimate that the deficit will decline to 4.1 private sector, for their open discussions and percent in FY2017/18 without divestment constructive dialogue.' proceeds. The larger than expected fiscal deficit The mission met with Minister of Finance is increasing funding challenges. While the Christopher Sinckler, Acting Central Bank central bank significantly reduced its funding of Governor Cleviston Haynes, Minister of Industry the government in the first half of FY2017/18, Donville Inniss, the leader of the opposition Mia the commercial banks' reserve requirements for Mottley, senior government officials, and holding government securities have been representatives of the private sector, labor increased. organizations and academia. 'Substantial further fiscal effort is needed to PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 15

IMF Communications Department In the meantime, creditors have been organizing MEDIA RELATIONS conference calls, holding improvised meetings in PRESS OFFICER: Randa Elnagar Caracas hotels and discussing the creation of Phone: +1 202 623-7100 Email: [email protected] groups that could represent bondholders in the IMF - International Monetary Fund published this content on 22 November 2017 and is solely event of a default. responsible for the information contained herein. "There are a lot of different conversations, a lot Distributed by Public, unedited and unaltered, on 22 of lawyers, financial advisers who are trying to November 2017 16:00:03 UTC. solicit that dialogue," said Diego Ferro, co-chief (C) Copyright 2017 - IMF - International Monetary investment officer at Greylock Capital, which Fund focuses on high-yield and distressed assets. Ferro said that for the past few weeks, he has

been buying both bonds issued by Venezuela's Suriname government as well as those sold by its state- owned oil company PDVSA, with a preference for the country's 2027 bond. Moody's places Suriname's B1 rating Both the 2027 bond and all of those issued by on review for downgrade PDVSA share a common characteristic: They 22-Nov-2017 lack a clause that can force all bondholders to Nov 22 (Reuters) - Moody's: accept a restructuring pact as long as 75 percent Moody's places Suriname's b1 rating on sign off on the deal. review for downgrade. The absence of such collective action clauses, or Moody's says decision to initiate review for CACS, can allow a small group of investors to Suriname rating downgrade prompted by hold out for better terms, as famously happened significant deterioration in government's fiscal after Argentina defaulted in 2001. position, among others. Venezuela's Information Ministry did not respond Moody's says decision to initiate review for to a request for comment. Suriname downgrade prompted by likelihood ECHOES OF ARGENTINA that fiscal reforms will proceed more slowly in Distressed fund managers including Elliott IMF program absence. Management and Aurelius Capital Management reaped billions of dollars last (Bengaluru Newsroom) year when they negotiated a settlement with Argentina's newly elected government, which was anxious to end more than a decade of legal battles with bondholders. Venezuela "We're basically thinking of eventually going into a restructuring not too dissimilar from what As many Venezuela bondholders Argentina went through in 2001-2005," said stampede, some joust for advantage Nicolas Galperin, founder of Onslow Capital Management. 20-Nov-2017 Galperin said his firm is looking to buy the bonds By Dion Rabouin, Maiya Keidan and Corina Pons for around 20 cents on the dollar and earn pass- NEW YORK/LONDON/CARACAS, Nov 20 through interest with the hope of eventually (Reuters) - Venezuela's efforts to restructure selling them at a profit through a future its debt may have triggered an initial restructuring. stampede for the exits, but some investment He said he envisioned it as a two to three-year funds are maintaining their portfolios or even trade and was employing the strategy on both beefing them up, betting that other investors' PDVSA and Venezuela bonds. distress could spell opportunity. But an Argentina-like solution is effectively President Nicolas Maduro spooked bondholders impossible in the short term. this month when he announced plans to Sanctions imposed on Venezuela this year by the restructure some $60 billion in bonds as his government of U.S. President Donald Trump, in socialist government struggles with an economic response to accusations that Maduro is creating crisis brought on by years of mismanagement. a dictatorship, block U.S. banks from acquiring Yet Maduro also said the country would keep newly issued Venezuelan debt. servicing its obligations for now. That has given Investors would be unable to negotiate a a modicum of comfort to investors wagering on settlement like the one bondholders reached Venezuela's junk bonds, some of whom are with Argentina because they cannot exchange content to reap the massive yields they offer. the bonds they hold for new debt. Others are actively positioning for large windfall Sanctions against specific Venezuelan officials profit similar to what a group of Argentine bar investors from even sitting at the table with creditors reaped last year after more than a Vice President Tareck El Aissami and Economy decade of litigation with Argentina's Minister Simon Zerpa, two prominent members government. of Venezuela's debt negotiation commission. Senior Venezuelan officials gave no clarification That means long-term investments are clouded on the government's strategy in a short and by the possibility that sanctions could impede a confused meeting with creditors in the successful debt restructuring for years, Venezuelan capital last week. particularly if the opposition continues struggling PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 16 to make any headway at removing Maduro. While Venezuela has kept current on its bond Even though Maduro is widely unpopular, the payments, it has paid some coupons late, opposition remains divided and in disarray, with leading ratings agencies to declare a selective its most prominent leaders jailed, exiled or default and keeping creditors guessing. Another barred from holding public office. Presidential $237 million in interest payments were due on elections are expected next year. Tuesday but market sources said there was no Nonetheless, investors continue to be sign of the funds hitting their accounts yet. attracted to lucrative short-term returns. Venezuela failed to make those payments A holder of Venezuela's most-traded bond, the within the grace period, credit rating agency 2027 maturity, would get a 34 annual percent Standard & Poor's said late on Tuesday, return from interest payments alone. announcing it was downgrading the ratings on That is 15 times what the same investor Venezuela‟s global bonds due 2025 and 2026 would collect on a 10-year U.S. Treasury note. to „D‟ from „CC.‟ Investors for now appear more interested in In the United States, Millstein & Co's head of collecting those outsized returns than initiating sovereign advisory Mark Walker said he had met an Argentina-style battle - though many believe with an initial group of more than 20 creditors Venezuela will eventually halt payments and regarding the formation of a possible committee. creditors will sue to pressure the government He declined to name the creditors, citing into a settlement. confidentiality. Bondholders walked away from last week's Bank industry group the Institute of meeting in Caracas with a clear message from International Finance has also been looking at Vice President El Aissami: Venezuela "has hired forming a creditors' committee, two sources the best lawyers." familiar with the matter told Reuters. Venezuela has appointed lawyer David Syed to It was unclear how many groups would advise it, working alongside a team at global law ultimately form. firm Dentons, according to IFR, a Thomson Creditors have also been organizing conference Reuters news service. calls, and holding improvised meetings in Many saw El Aissami's words as a warning that, Caracas hotels, investors have said. despite the increasingly complex financial For any restructuring to work, advisers and fund gymnastics, Caracas is preparing for a battle, managers said two main conditions need to be and that creditors should do so as well. met: the removal of U.S. sanctions on Venezuela that block U.S. banks from acquiring newly (Additional reporting by Brian Ellsworth, writing by issued Venezuelan debt, and a commitment by Christian Plumb; Editing by Cynthia Osterman) Maduro to economic reforms. (( [email protected] ;)(646)( 223- Neither is likely to be met any time soon. 5942; Reuters Messaging: Many in Venezuela's once-prosperous [email protected] )) economy are suffering from food shortages

and preventable disease against a backdrop of steep inflation triggered by years of Venezuela bondholders look to form government mismanagement. The alliances under restructuring limbo government blames a fall in oil prices and a U.S.-led "economic war" for Venezuela's 22-Nov-2017 financial mess. By Brian Ellsworth, Tracy Rucinski and Sujata "You can't have a viable restructuring without a Rao credible economic plan and a government with Nov 21 (Reuters) - Holders of Venezuelan the commitment and competence to execute it," bonds are meeting with each other and said Walker, who advised on Greece's considering forming committees, advisers and fund managers told Reuters, as questions restructuring while working at Lazard. mount about the feasibility of President "If creditors are asked to take a hit now, they Nicolas Maduro's proposal to restructure $60 need to have reason to believe that they will be billion of debt. better off in the future," he added. Maduro has said the country will keep servicing But Maduro's socialist government has its obligations for now. But bondholders ranging consolidated power this year, creating a new from longstanding investment funds to hedge rubber stamp constituent assembly, and has funds and emerging markets funds in the United shown little interest in economic reform. States and elsewhere are starting to lay the That lack of flexibility is likely if anything to lead foundations for a potentially bitter and messy to still tougher sanctions by the administration battle over a possible default down the road. of U.S. President Donald Trump, who has A UK-based hedge fund, MacroSynergy Partners, described Maduro as a "bad leader who dreams has invited institutional holders of Venezuelan of becoming a dictator." and state-owned oil company PDVSA debt to a Venezuela's Information Ministry and PDVSA did Nov. 30 meeting in London to discuss the likely not respond to a request for comment. path forward and the next steps for creditors, Also key to any restructuring is the willingness according to an invitation seen by Reuters. of groups beyond the bondholders to spread the Participants will also discuss whether to create financial burden, advisers said. an informal, ad hoc bondholder committee, the Venezuela's $60 billion in bonds is estimated invitation said. to be only a third of the country's total debt, PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 17 with the rest in the hands of Russia and credit for Chad at the end of June. The IMF China. initially released $48.8 million to Chad but said Russia last week agreed a debt restructuring the release of further funds would depend on deal with Venezuela, while China voiced progress reports at subsequent meetings. confidence in the government's handling of Negotiations are likely to be further delayed the debt issue. after President Idriss Deby sacked his Finance Minister Christian Georges Diguimbaye and the (Reporting by Brian Ellsworth in Caracas, Tracy deputy. Rucinski in Chicago and Sujata Rao in London,; A Chadian government source said a mid- additional reporting by Marc Jones in London, Dion Rabouin and Dan Bases in New York and Tom Hals in November deadline for Chad to report Wilmington, Delaware, Editing by Rosalba O'Brien) progress on commercial debt talks to the IMF (( [email protected] ; +1-312-408- was missed and IMF funds would not be 8575; Reuters Messaging: released until early 2018. [email protected] )) "Chad's case was to be discussed by an IMF council on Nov. 15 but a commercial agreement with Glencore was needed for this to be valid. As AFRICA this did not occur, the case will be submitted in December for a fund release in January or

February," the source said. Algeria A second Chadian government source also said the next disbursement from the IMF had been delayed. Algeria should pay debts owed to The IMF said at the end of June that the foreign and local firms "remaining amount will be phased over the 23-Nov-2017 duration of the programme, subject to semi- ALGIERS, Nov 23 (Reuters) - Algerian annual reviews." The programme lasts three President Abdelaziz Bouteflika ordered his years. government to settle debts owed to foreign An IMF spokesman did not respond to requests and local companies immediately, the for comment by phone and email. A spokesman presidency said on Thursday. for Glencore declined to comment. The debt amounts to around 400 billion Algerian Negotiations to amend the loan terms for a dinars ($3.50 billion). second time since the 2014 oil price crash Algeria's economy has been under pressure became fraught last month after Chad cut part since oil prices started falling in mid-2014. This of the oil Glencore had been due to receive in hit oil and gas earnings, which account for 60 favour of ExxonMobil, starting from January. percent of the state budget. A series of meetings in Paris this month ended without a deal. After the meetings, commodities ($1 = 114.4260 Algerian dinars) trader and miner Glencore wrote a letter copied (Editing by Matthew Mpoke Bigg) to the IMF reiterating its offer.A spokesman for (( [email protected] ; +44 20 7250- 1122 ; )) Chad's state-run oil firm Societe des Hydrocarbures du Tchad (SHT) said the firm was seeking an overall reduction on the interest rate from "about 9 percent to a maximum of 5 Chad percent, including Libor." Glencore said in its letter it had offered a IMF credit to Chad delayed over temporary interest rate reduction to Libor plus 4 Glencore oil debt percent along with a grace period on principal until the last quarter of 2019, down from 6.75 24-Nov-2017 percent. •Only $48.8 million of IMF's $300 million Two banking sources said that the proposal was credit paid out still being evaluated by Chad. •Sacking of finance minister may delay At the moment, Chad still owes about $1.3 Glencore talks •Chad's oil firm seeks lower overall interest billion from the original $1.45 billion that rate Glencore and a consortium of lenders loaned the By Julia Payne and Madjiasra Nako country in 2014 in exchange for crude. LONDON/N'DJAMENA, Nov 24 (Reuters) - Chad's SHT used those funds to buy a 25 percent stake stalled talks with Glencore on restructuring in the major oil producing Doba Consortium from more than $1 billion in debt due to the trading Chevron. firm has delayed the release of IMF funds for Despite being one of the world's poorest nations, the struggling central African country until at its army played a major role in reclaiming least early next year, sources familiar with territory back from Boko Haram, an Islamist the matter said. militant group that took over large swathes of The International Monetary Fund has said Chad's Nigeria's northeast in 2014 including key border external commercial debt, most of which is to towns. Glencore, was unsustainable as it eats up most Chad continues to help regional security of the country's oil revenues. initiatives, including a U.N. peacekeeping The fund approved just over $300 million in mission in Mali. PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 18

FY19 due to economic recovery and lower (Additional reporting by Aaron Ross in Dakar; Editing current spending. GG debt will rise to 47% of by Edmund Blair) GDP from 40.7% in FY16 and only 24.8% in (( [email protected] ; +44 207 542 FY14. We believe that SACU transfers will 1836; )) underperform official projections due to sagging

growth in South Africa. The high public payroll is likely to absorb 50% of revenue in FY17, and is Namibia a source of fiscal rigidity. It has soared by 50% in real terms since FY11, and wages in the public sector will rise further in FY18 under a three- Fitch Downgrades Namibia to 'BB+'; year agreement with the trade unions. Reducing Outlook Stable the number of state employees will be 20-Nov-2017 challenging in the run-up to Namibia's 2019 HONG KONG, November 20 (Fitch) Fitch elections and against the background of high Ratings has downgraded Namibia's Long-Term inequality. Foreign-Currency Issuer Default Rating (IDR) The accumulation of previously undisclosed to 'BB+' from 'BBB-'. The Outlook is Stable. arrears by several ministries has shed light on A full list of rating actions is at the end of this underlying shortcomings in the management rating action commentary. of public finances. The envisaged public KEY RATING DRIVERS infrastructure fund which will be managed by the The downgrade of the Long-Term Foreign- Development Bank of Namibia (DBN) will Currency IDR reflects weaker-than-forecast improve the execution of some large public fiscal outcomes and our projection that public investment projects which are incurring cost debt-to-GDP will continue to rise over the overruns. However, it could reduce the medium term. This will leave debt in financial government's incentive to cut non-priority year 2019 (FY19, to end-March 2020) at capital spending. The liabilities arising from nearly double the ratio in FY14. The related investment spending will be attributed to downgrade also reflects a weaker-than-expected the fund, although this debt will be serviced by economic recovery and our view that medium- the sovereign. term growth has shifted to a lower gear. GDP growth will decelerate to 0.8% in 2017 Fiscal consolidation was temporarily interrupted from 1.4% in 2016, according to our forecasts. in FY17. We forecast the general government Cuts in public investment have taken a toll on (GG) deficit to narrow to 6% of GDP from 6.9% domestic demand and activity in the in FY16, against a revised government target of construction sector. The expansion of mining 5.3%. However, this improvement is due solely output has been slower than expected due to to a one-off surge in transfers from the South weak uranium prices while the increase in the African Customs Union (SACU) which we expect production of the Husab uranium mine to full to lead to a downward adjustment in the capacity was further delayed. GDP has receipts for FY19. The initially projected contracted by 1.7% year-on-year in 1H17 reduction in aggregate public capital spending despite the growth in the output of other mining will not materialise due to a NAD2.5 billion commodities and the recovery in agriculture capital injection in a new public infrastructure following a drought in 2016. fund and to the settlement of previously The economic outlook through to year 2019 unreported arrears worth NAD2.7 billion arising remains lacklustre. We project GDP growth to from commitments undertaken in FY16. Total strengthen to 2% in 2018 and 3% in 2019, well spending-to-GDP will stabilise as lower non- below the 2010-2015 average of 5.7%. The wage current outlays will offset the rise in the acceleration in growth will be driven by the payroll, interest costs and public investment. rebound in crop production, steady growth in The government has revised its fiscal mining output, and stabilisation of public consolidation strategy, and no longer targets investment. Namibia's medium-term growth will a reduction or stabilisation of debt-to-GDP remain constrained by the lack of fiscal space, between FY17 and FY20. The latest Medium low prices for key mining products including Term Expenditure Framework (MTEF) published earlier in November projects GG uranium, tighter financing conditions and debt to grow to 44.2% in FY19, while it was subdued growth in neighbouring South Africa forecast to decline to 37.7% in the previous and Angola. MTEF. The government also foresees a reduction Namibia's 'BB+' IDRs also reflect the following in the GG deficit to 2.9% in FY19, up from a key rating drivers: previous target of 1%. It plans to achieve this The government's financing conditions have improvement by cutting operational costs, eased after the strain observed in 2016. Namibia stabilising capital spending in nominal terms, has secured a ZAR10 billion loan from the and freezing the wage bill by reducing the African Development Bank (AfDB) in 2017. number of civil servants by 2% per year through Demand for government securities was bolstered natural attrition. by amendments to the regulation on pension We project fiscal metrics to fall short of the funds and long-term insurers gradually raising government's revised targets. We forecast the the minimum allocation to domestic assets from GG deficit to narrow only to 4.6% of GDP in 35% to 45% by October 2018. The disbursement of the first tranche of the AfDB PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 19 loan, asset repatriations by investment funds above the 'BB' median. and higher SACU receipts caused excess liquidity SOVEREIGN RATING MODEL (SRM) and to soar fourfold to around NAD6 billion, QUALITATIVE OVERLAY (QO) according to Bank of Namibia (BoN). Fitch's proprietary SRM assigns Namibia a score Refinancing risks are moderate. The stock of T- equivalent to a rating of 'BB+' on the Long-Term bills has doubled in two years, which has raised Foreign-Currency (FC) IDR scale. the rollover risk. Public finances are vulnerable Fitch's sovereign rating committee did not adjust to the risk of a depreciation of the South the output from the SRM to arrive at the final LT African rand to which the Namibian dollar is FC IDR. pegged, as 30% of GG debt is denominated in Fitch's SRM is the agency's proprietary multiple foreign currencies other than the rand. regression rating model that employs 18 Significant contingent liabilities for the budget variables based on three-year centred averages, arise from the possible need to restructure some including one year of forecasts, to produce a loss-making SOEs, notably in the transport score equivalent to a LT FC IDR. Fitch's QO is a sector. The expected liquidations of the troubled forward-looking qualitative framework designed SME bank and Road Contractor Company are to allow for adjustment to the SRM output to pending judicial approval but will generate only assign the final rating, reflecting factors within modest costs for the budget. Additional our criteria that are not fully quantifiable and/or contingent liabilities for the budget arise from not fully reflected in the SRM. guarantees of SOE debt amounting to 7.4% of RATING SENSITIVITIES GDP, most of which are on external debt. The Stable Outlook reflects Fitch's assessment The Public Enterprise Governance Act that upside and downside risks are broadly Amendment bill will streamline the institutional balanced. framework of state-owned enterprises (SOEs). Future developments that could result in a Its approval in Parliament is likely in 2018. The downgrade include: reform may reduce government transfers to -Significant deterioration in debt dynamics unprofitable public companies and also paves beyond our current forecasts the way for a possible partial privatisation of -Wider-than-expected external deficits or some state assets, notably the telecoms emergence of significant external funding operator MTC. pressures We forecast the current account deficit to remain -Lower-than-forecast economic growth, for wide, averaging 6.9% in 2017-2019, well above example due to an aggravation of policy the 'BB' median of 2.1%. It will nonetheless uncertainty or weaker mining activity improve from 14.5% in 2016 as imports of Future developments that could result in an capital goods moderate and mining exports upgrade include: expand. Net external debt increased to 5% of -Narrowing of the budget deficit sufficient to GDP in 2016, turning to a debtor position for place the government debt-to-GDP ratio on a the first time since 2005. External financing downward trajectory conditions are affected by heightened political -Marked improvement in the current account and economic risks in South Africa. External balance consistent with a stabilisation of buffers have improved, with foreign-currency external-debt-to GDP ratios reserves forecast to average 4.2 months of -Stronger medium-term growth resulting from current account payments in 2017-2019, up better prospects for the mining sector or from 3.1 in 2016. This is due to the implementation of structural reforms disbursement of the AfDB loan, asset KEY ASSUMPTIONS repatriations and the repayment of some BoN We expect global economic trends and claims on the National Bank of Angola. commodity prices to develop as outlined in The congress of the ruling South West African Fitch's Global Economic Outlook. People's Organization (SWAPO) later in The full list of rating actions is as follows: November is a source of policy uncertainty. We Long-Term Foreign-Currency IDR downgraded to expect the fiscal and growth-enhancing reform 'BB+' from 'BBB-'; Outlook Stable drive to gain momentum after the congress. A Long-Term Local-Currency IDR downgraded to government reshuffle seems likely, and we 'BB+' from 'BBB-'; Outlook Stable expect a new cabinet to initiate some major Short-Term Foreign-Currency IDR downgraded reforms - including the overhaul process of the to 'B' from 'F3' SOE sector. We also expect the government to Short-Term Local-Currency IDR downgraded to retract the most controversial provisions of the 'B' from 'F3' National Economic Equitable Empowerment Country Ceiling downgraded to 'BBB-' from 'BBB' (NEEE) draft bill and the National Investment Issue ratings on long-term senior unsecured Promotion Act (NIPA), and submit revised foreign-currency bonds downgraded to 'BB+' versions of the two bills to Parliament in 2018. from 'BBB-' The controversial provisions of the NEEE draft Issue ratings on long-term senior-unsecured bill and NIPA underscore the lingering policy local-currency bonds downgraded to 'BB+' from risks resulting from Namibia's high inequality 'BBB-' despite being likely to be withdrawn. Namibia's Namibia's National Long-Term Rating on the long-standing political stability and governance South African scale downgraded to 'AA+(zaf)' indicators are a major credit strength, at well PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 20 from 'AAA(zaf)'; Outlook Stable bond Issue ratings on Namibia's bonds with a National 20-Nov-2017 rating downgraded to 'AA+(zaf)' from 'AAA(zaf)' By Robert Hogg LONDON, Nov 20 (IFR) - Nigeria has set final Media Relations: Peter Fitzpatrick, London, Tel: +44 terms for a US$3bn dollar dual-tranche bond 20 3530 1103, Email: offering, according to a lead. [email protected]; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: The sovereign has launched US$1.5bn [email protected]. November 2027s at a yield of 6.50%. The 10- Additional information is available on year notes were initially marketed at 6.75% www.fitchratings.com area. Nigeria has also launched US$1.5bn November

2047s at a yield of 7.625%. The bonds were Namibia's president says won't seek originally marketed at 7.875% area. The bond is IMF or World bank bailouts the first 30-year tranche by a sub-Saharan African sovereign, excluding South Africa. 23-Nov-2017 The combined order books are over US$11.4bn. WINDHOEK, Nov 23 (Reuters) - Namibia will Allocations and pricing are to follow via Citigroup not seek a bailout from the International and Standard Chartered. Nigeria is rated Monetary Fund or the World Bank even B2/B/B+. though its economy is struggling, President

Hage Geingob told ruling party delegates on (Reporting by Robert Hogg; editing by Alex Chambers) Thursday in a conference where his position (( [email protected] ; +44 207 542 was up for grabs. 9077; )) Geingob, who has presided over an economy that has been downgraded to "junk" by Moody's and Fitch, is being challenged for the party's presidency by long-time rival and current sports Rwanda minister Jerry Ekandjo and former Prime Minister Nahas Angula. Rwanda raises 10 bln francs with 7- The southern African country's economy has year Treasury bond seen growth nosedive from an average 5 percent growth over the last five years to a marginal 0.2 23-Nov-2017 percent last year. KIGALI, Nov 23 (Reuters) - Rwanda sold a In a speech at the ruling SWAPO party's seven-year Treasury bond worth 10 billion congress, Geingob - who is the party's acting francs ($11.85 million) on Thursday to fund president - said Namibia would manage without infrastructure projects, the central bank said. The National Bank of Rwanda said the bond had help from the global lenders. a final coupon and yield of 12.40 percent and a He said former presidents Sam Nujoma and subscription rate of 178.14 percent. Hifikepunye Pohamba had not sought help from The bond will be listed on the Rwandan bourse the global lenders, and he too would steer clear on Tuesday for secondary buyers. of them. Rwanda also issues bonds as part of a plan to "The only way to maintain our economic develop its small capital market. The East sovereignty therefore, would be continuing the African country aims to cut its dependence on prudent management of our fiscus by ensuring aid to finance its budget, 17 percent of which that every single cent of taxpayers' money is currently comes from aid money. spent in an accountable and effective manner," Rwanda will next issue a 15-year bond on he said. February 21, 2018, the bank said. The party will announce a new head on

Saturday. ($1 = 844.2300 Rwandan francs) Namibia’s economy will grow at 1.6 percent this (Reporting by Clement Uwiringiyimana; Editing by year and by double that in 2018 as the mining Aaron Maasho) sector emerges from years of contraction and (( [email protected] ; the impact of recent severe drought on farming +250 784 031935; Reuters Messaging: eases, its finance minister said earlier this Clement.Uwiringiyimana.thomsonreuters.com@reuters month. .net ))

(Reporting by Nyasha Nyaungwa; Editing by James Macharia) (( [email protected] ; South Africa +27117753126; Reuters Messaging: [email protected] )) Fitch Affirms South Africa at 'BB+';

Outlook Stable 23-Nov-2017 Nigeria HONG KONG, November 23 (Fitch) Fitch Ratings has affirmed South Africa's Long- Nigeria launches US$3bn dual-tranche Term Foreign-Currency Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook. PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 21

A full list of rating actions is at the end of this reflects policy paralysis ahead of the ANC's rating action commentary. elective conference in December. We assume KEY RATING DRIVERS that the budget to be presented in February South Africa's ratings are weighed down by 2018 will contain revenue- and expenditure- low trend growth, sizeable government debt side consolidation measures that are already and contingent liabilities and deteriorating being discussed by the Presidential Fiscal governance standards. These weaknesses are Committee but that were not yet factored into balanced by a favourable government debt the MTBPS. Nevertheless, the combination of structure, deep local capital markets and a these developments suggest a decline in flexible exchange rate that helps to absorb commitment to fiscal consolidation, which if not external shocks. The affirmation reflects that addressed, would place downward pressure on while a number of developments point to a the ratings. weaker fiscal outlook and consequent faster Total contingent liabilities including SOE debt pace of debt accumulation, potential fiscal (with and without state guarantees) and consolidation measures after the ANC's elective guarantees for independent power producers conference in December could mitigate those and public private partnerships amounted to trends. Additionally, GDP growth could recover 21% of GDP in 2017. Financial pressures and more strongly than currently anticipated if the governance challenges have raised the risk that outcome of the conference is viewed favourably SOE-related contingent liabilities could migrate by consumers and businesses. to the sovereign balance sheet, although in In its Medium-Term Budget Policy Statement Fitch's view its capacity to provide financial (MTBPS), the government lowered its forecast support to distressed SOEs may be declining. for revenues by ZAR51 billion (1.1% of GDP in Due to concerns over governance, many FY17/18), with similar reductions in subsequent creditors of SOEs have stopped rolling over years. As a result, forecasts for deficits and existing facilities leading to liquidity pressures, government debt for the full three-year notably at Eskom, the main electricity supply forecast period were raised substantially. The and distribution company. The plan for large general government budget deficit for FY17/18 investments in nuclear power generation is still is now forecast to be 4.3% of GDP, much higher progressing, despite some legal setbacks. This than the forecast in the February budget of could lead to a large further increase in 3.1% but in line with our revised forecast. government guarantees over the long term. The government now forecasts gross loan Political uncertainty is elevated ahead of the debt (excluding local authorities) to stand at ANC's five-yearly elective conference on 16 to 60.8% of GDP in FY21/22 and to remain on an 20 December, which will choose the successor to upward trend, compared with a forecast in the Jacob Zuma as chairman of the party and the February budget for debt to start declining likely successor to Mr Zuma as president of from FY18/19 to 51.9% by FY21/22. We now South Africa after the 2019 parliamentary forecast a fiscal deficit of 3.6% of GDP in election (or earlier if Mr Zuma does not complete FY18/19 and FY19/20 and expect general his full term). The run-up to the party government debt (gross loan debt plus local conference has contributed to policy paralysis, government debt of around 2% of GDP) to rise and we assume that the situation will not to 59.2% of GDP in FY19/20 from 52.6% in immediately improve after the conference. FY16/17. This represents a material increase Issues to be resolved include the reality that from the previous assumption of 55.1% for both of the main candidates will need to form FY18/19 at our last rating review in June 2017. complex alliances to win, that a split of the party Shortly after the MTBPS it emerged that the chairmanship and the national presidency could government plans to raise spending on tertiary lead to inefficiencies and that disruptive in- education. Details are still to be worked out, but fighting between factions is likely to continue. we assume the initiative will cost about 0.5% of South Africa experienced a recession in 4Q16 GDP per year, with a lower impact in the initial and 1Q17 but recovered in 2Q17. Fitch year. The possibility of a costly National Health forecasts growth of 0.7% in 2017 with only a Insurance scheme also remains, although a moderate recovery to 1.6% in 2018 and 2% in recent report to the National Treasury concluded 2019. A significant impediment to growth is low this is unaffordable under current economic business confidence reflecting considerable conditions. We also assume on-going public concerns about the political environment, as sector wage negotiations will result in slightly reflected in BER manufacturing business higher wage rises than anticipated in the MTBPS. surveys. A resolution of these concerns could In the MTBPS, the government forecasts that it lead to a stronger recovery but this is currently will breach the expenditure ceiling in FY17/18, not our baseline scenario. In Fitch's view, although this may still be avoided in the final growth will continue to be held back by out-turn. The importance of the National structural weaknesses such as skills mismatches Treasury in the budget process may also have and inefficiencies in the wage-setting process. declined with the establishment of the As a result, growth is likely to remain insufficient Presidential Fiscal Committee. The government to significantly reduce large inequalities, leading also did not propose significant consolidation to pressures for redistributive policies that measures in response to the heightened fiscal further weaken the growth potential. pressures. In Fitch's view, to some extent this Low private sector investment and private PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 22 consumption have depressed imports, leading to •A substantial strengthening in trend GDP a significant narrowing in the current account growth. deficit, to around 2% in 2017. The expected •An improvement in governance standards, moderate recovery in growth will lead to a slow including for SOEs, that is supportive of public widening of the deficit. Net external debt, at finances and investment. 12.1% of GDP in 2017, is in line with 'BB' •A marked narrowing in the budget deficit and a category peers. Foreign ownership of reduction in the government debt/GDP ratio. government debt securities is high, exposing KEY ASSUMPTIONS the country to sudden shifts in investor Fitch expects global economic trends and sentiment, but the flexible exchange rate and commodity prices to develop as outlined in low level of public external debt reduce Fitch's Global Economic Outlook. vulnerabilities. The full list of rating actions is as follows: The World Bank's governance indicator for South Long-Term Foreign-Currency IDR affirmed at Africa is well above the 'BB' category median, 'BB+'; Outlook Stable but wide-spread reporting of governance failures Long-Term Local-Currency IDR affirmed at at SOEs suggests that the indicator exaggerates 'BB+'; Outlook Stable the country's strength in this area. Other Short-Term Foreign-Currency IDR affirmed at 'B' structural indicators, such as GDP per capita, are Short-Term Local-Currency IDR affirmed at 'B' broadly in line with peers. Banks are generally Country Ceiling affirmed at 'BBB-' well regulated and profitable making it unlikely Issue ratings on long-term senior unsecured that the sovereign will need to support the foreign-currency bonds affirmed at 'BB+' sector. Issue ratings on long-term senior unsecured SOVEREIGN RATING MODEL (SRM) and local-currency bonds affirmed at 'BB+' QUALITATIVE OVERLAY (QO) Issue ratings on short-term senior unsecured Fitch's proprietary SRM assigns South Africa a local-currency bonds affirmed at 'B' score equivalent to a rating of 'BBB' on the Issue ratings on sukuk trust certificates issued Long-Term Foreign-Currency (LT FC) IDR scale. by RSA Sukuk No. Trust affirmed at 'BB+' Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC Media Relations: Peter Fitzpatrick, London, Tel: +44 IDR by applying its QO, relative to rated peers, 20 3530 1103, Email: as follows: [email protected]; Wai-Lun Wan, Macroeconomic Performance, Policies and Hong Kong, Tel: +852 2263 9935, Email: Prospects: -1 notch, to reflect South Africa's [email protected]. weak growth prospects relative to the 'BB' and Additional information is available on 'BBB' category medians, with important www.fitchratings.com implications for public finances. Structural Features: -1 notch, to reflect that the deterioration in governance standards, Ratings cut? South Africa's local bonds particularly related to SOEs, in Fitch's view is not already trade as junk fully reflected in the World Bank governance 24-Nov-2017 indicator, which remains supportive. By Sujata Rao and Karin Strohecker Fitch's SRM is the agency's proprietary multiple LONDON, Nov 23 (Reuters) - South Africa's regression rating model that employs 18 deeper descent into junk-credit territory and variables based on three-year centred averages, ejection from major global debt indexes seem including one year of forecasts, to produce a to be accepted as a done deal before they score equivalent to a LT FC IDR. Fitch's QO is a actually happen, bond yields and default forward-looking qualitative framework designed insurance costs suggest. to allow for adjustment to the SRM output to Africa's most industrialised country risks assign the final rating, reflecting factors within downgrades on its local currency debt rating our criteria that are not fully quantifiable and/or from Moody's and S&P Global on Friday. Both not fully reflected in the SRM. rate it on their lowest investment grade rung of RATING SENSITIVITIES Baa3/BBB-minus. The following risk factors could, individually or A cut by both agencies would see South collectively, result in negative rating action: Africa's $125 billion debt market lose its place •A failure to implement credible fiscal in the World Government Bond Index and the consolidation to arrest the upward trajectory of Barclays Bloomberg index. That would in turn the government debt/GDP ratio, or a heightened force index-tracking and rating-constrained risk that SOE debt will migrate to the sovereign's funds to sell more than $10 billion in debt, balance sheet. analysts have predicted. •A further deterioration in South Africa's trend But it would only confirm the view, long held by GDP growth rate, for example, due to sustained seasoned emerging bond investors, that the uncertainty about economic policy or governance once-prized but inexorably deteriorating concerns. emerging market deserves to be treated as junk. •Rising net external debt to levels that raise the Plagued by corruption, moribund growth, refusal potential for serious financing strains. to embrace reform and - most recently - by a The following risk factors could, individually or budget deficit blowout revealed by Finance collectively, result in positive rating action: Minister Malusi Gigaba, South African 10-year PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 23 bonds yield over 9 percent. "For every seller there is a buyer dependent on That is well above Indonesia, Romania or the price and the yield, and there are levels Hungary, which carry the same rating from definitely where local managers will see some Moody's. value," said Melville du Plessis who oversees a The cost of insuring exposure to South 150 billion rand ($11 billion) portfolio at Sanlam Africa's debt via credit default swaps (CDS) is in Johannesburg. also higher than peers with the same Moody's rating. Its five-year CDS spread is double ($1 = 13.9001 rand) Indonesia's for instance. (Reporting by Sujata Rao and Karin Strohecker, "If you look at external debt spreads and CDS, additional reporting and graphic by Marc Jones in that's pretty much bang on where the average London, additional reporting by Mfuneko Toyana in BB credit trades. It's trickier to compare on the Johannesburg; editing by John Stonestreet) local side, but nonetheless it's cheap... real (( [email protected] ; +442075427262; Reuters Messaging: yields are among the highest in EM," said Paul [email protected] )) Greer, senior trader at Fidelity International. A CDS-based model from S&P Capital shows markets pricing a two-notch downgrade, treating South African foreign debt - downgraded to junk Zambia earlier this year - as if it were BB- rather than BB+, as this graphic shows: Zambia moves to slow down debt Correspondingly, South African dollar bonds pay accumulation as it seeks IMF aid an average premium of 287 basis points over Treasuries, while Indonesia pays 173 bps. 23-Nov-2017 "It feels like time has run out," said Sailesh Lad, LUSAKA, Nov 23 (Reuters) - Zambia has senior portfolio manager at AXA Investment suspended new non-concessional borrowing Managers who is "underweight" South African to slow down the pace of debt accumulation debt in his portfolio. as it seeks support from the International Monetary Fund (IMF), Finance Minister Felix "The budget tells you the debt dynamics are on Mutati told parliament. a worsening trend, the finance minister has not Zambia and the IMF agreed in October to chart a delivered what was anticipated." new path towards debt sustainability after the Gigaba in October slashed growth forecasts and IMF delayed the conclusion of talks with Africa's hiked his budget deficit to 4.3 percent of gross second-biggest copper producer, saying it was at domestic product from 3.1 percent in April, high risk of debt distress. pencilling in a big rise in borrowing. Zambia's publicly guaranteed debt rose to 60 For Lad, this means little policy change can be percent at end of 2016 from 36 percent of expected after the ruling ANC party's December GDP at the end of 2014. conference that will vote to replace its scandal- Mutati told parliament late on Wednesday all plagued leader Jacob Zuma. commercial contracts that require debt financing "Whoever wins in December, the ANC has should only be signed with approval from the already dictated what policy is going to be... Are Treasury. you going to see wholesale change? I don't think The government was also implementing new so," he said. revenue mobilisation measures such automation Cristiana de Alessi, a portfolio manager at BNP and appointment of tax collection agents, he Paribas Asset Management, said most of the said. risks cited by agencies for the sovereign rating "With these measures (the) government has had already materialised. For her, the turning continued to engage the IMF," Mutati said, point came in March when Zuma sacked without giving a timeframe on when the respected finance minister Pravin Gordhan negotiations were likely to be concluded. without warning. Mutati said the conclusion of talks with the IMF "The ratings agencies always talked about the was expected to enhance foreign exchange flows strength of the institutions, and you can see a from the private sector and reduce negative marked deterioration in the Treasury over the sentiment among investors. past six months or so," she said. Zambia's central bank governor said on However, de Alessi and Greer both reckon South Wednesday the delay in reaching a conclusion African bonds could be attractively valued if a for an aid programme with the IMF was putting double-downgrade caused a huge selloff. pressure on the kwacha. Inflation-adjusted 10-year yields currently are around 4 percent and the rand is relatively (Reporting by Chris Mfula; Editing by James Macharia) cheaply valued, they said. (( [email protected] ;)) The local pension and insurance industry especially could step in if foreigners, who currently own half the bond market, started bailing out. Fund managers surveyed by Bank of America Merrill Lynch earlier this month said they could be enticed to buy if 10-year yields were between 9.50-10.00 percent. PDM Network Weekly Newsletter on Emerging Markets For information, contact the PDM Network Secretariat at: [email protected] Follow us on Twitter @pdmnet and on our website wwwpublicdebtnet.org 24

global stock and bond markets in the third quarter of 2017, albeit at a slower pace with Zimbabwe net outflows of $3.7 billion, data from research firm eVestment showed on Thursday. Zimbabwe's economic situation "very This was down from the second quarter's $7.7 difficult" billion of redemptions and the first quarter's whopping $22.7 billion, but it still marked the 23-Nov-2017 13th straight quarter of withdrawals. JOHANNESBURG, Nov 23 (Reuters) - Oil-backed sovereign funds have been under Zimbabwe's economic growth is threatened pressure since oil prices tumbled from their mid- by high government spending, an untenable 2014 highs of $115 a barrel to below $30 a foreign exchange regime and inadequate barrel in January 2016, forcing governments to reforms, a senior International Monetary Fund dig into their coffers to fill budget gaps. (IMF) official said. Oil prices have since stabilised and currently Zimbabwe was once one of Africa's most trade around $60 a barrel. Some of the worst-hit promising economies but suffered decades of governments have also tapped global bond decline as former President Robert Mugabe markets for cash, relieving some of this pursued policies that included the violent seizure pressure. of white-owned commercial farms and money- The figures from eVestment, which collates data printing that led to hyperinflation. from around 4,400 firms managing money on Mugabe, 93, resigned on Tuesday after nearly behalf of institutional investors, showed that net four decades in power following pressure from outflows were the smallest since the second the military, the ruling ZANU-PF party and the quarter of 2014, which was the last positive general population. quarter. New ZANU-PF leader Emmerson Mnangagwa is There was also a 37 percent reduction in the expected to be sworn in as Zimbabwe's outflows year-on-year, with some $34 billion president on Friday. pulled from third party asset managers in the Zimbabwe has not been able to borrow from international lenders since 1999 when it first three quarters, down from $53.9 billion over started defaulting on its debt, and has $1.75 the same period in 2016. billion rand in foreign arrears. "My sense is that whatever the driving factor "The economic situation in Zimbabwe remains which has caused so many SWF assets to be very difficult," Gene Leon, IMF's mission chief for removed from external asset managers, has for Zimbabwe said in a statement to Reuters late on the most part stabilised," said Peter Laurelli, Wednesday. global head of research at eVestment. "Immediate action is critical to reduce the deficit However, some 64 percent of investment to a sustainable level, accelerate structural products with SWF assets still experienced net reforms, and re-engage with the international outflows in the third quarter, essentially community to access much needed financial unchanged from the previous quarter. support." Equity strategies continued to shoulder the bulk Leon said Zimbabwe should resolve arrears to of the redemptions, with some $5.79 billion of the World Bank, African Development Bank and net outflows. This was down from $11.7 billion in the European Investment Bank, among other the second quarter and $18.6 billion in the first reforms, for the IMF to consider future financing quarter. request from the country. Within the equity segment, Laurelli said Zimbabwe should also be ready to implement redemptions were primarily from U.S. passively strong macroeconomic policies and structural managed S&P 500 strategies and global core reforms to restore fiscal and debt sustainability, equities. Leon said. This is notwithstanding a sustained rally in U.S. and world equity indices this year. (Reporting by David Lawder in Washington and Olivia Fixed income products pulled in $2 billion and Kumwenda-Mtambo in Johannesburg; Editing by emerging market hard currency debt attracted James Macharia) $528.3 million. This was, however, offset by (( [email protected] ; +27 11 redemptions of $572.3 million from blended 775 3159; Reuters Messaging: currency emerging market bond strategies. [email protected] )) (Reporting by Claire Milhench; Editing by Hugh Lawson) (( [email protected] ; +44)(0)( GLOBAL 207 542 3571; Reuters Messaging: [email protected] )) Sovereign funds pull $3.7 bln from global stock, bond markets in Q3

23-Nov-2017 By Claire Milhench LONDON, Nov 23 (Reuters) - Sovereign wealth funds (SWFs) withdrew more money from

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