Transcript Local Debt Monitor

Interest Rate Monitor
April 28, 2013
Brief Overview
International
MENA Region
US: Treasury yields lower as 1Q GDP lower than
forecast
Egypt project 3.8% fiscal year growth, IMF loan
in coming weeks
GCC News Highlights
Eurozone: Germany’s disappointing PMI numbers
fuels possibility of rate cuts.
UK: 1Q GDP beats forecast and avoids triple dip
recession
GCC interbank rates
Comparative MENA Markets
Local Economy
Markets overview
Major Indices: Stocks drop as US GDP figures
disappoint
Commodities and Currencies:
appreciate against the USD
Central Bank Meeting Calendar
Interest Rate Forecast
The Week Ahead
Major
currencies
New and analysis
 Interest Rate Forecasts
 February’s Oil Bill Up
Markets overview
 Amman Stock Exchange
 Local Debt Monitor
 Prime Lending Rates
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International
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US Treasury bonds’ yields down on gloomier growth outlook
•
US Treasuries rose, pushing 10-year note yields down the
most in two weeks, as a report showing the economy
expanded less than forecast in the first quarter sustained the
refuge appeal of the world’s safest assets.
•
USD gross domestic product annualized for the first quarter
registered a growth of 2.5%, 0.5% below the estimate of
3.0% by Bloomberg.
•
Additionally, the Thomson Reuters/University of Michigan
final April index of consumer sentiment declined to 76.4
from 78.6 in March.
10-Year Treasury Rate
1.75%
1.74%
1.74%
1.73%
1.72%
1.74%
1.73%
1.72%
1.71%
1.70%
1.70%
1.69%
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1.68%
21/04/2009
22/04/2009
23/04/2009
24/04/2009
25/04/2009
Growth in U.S. Trails Forecasts as Defense Spending Falls
•
The U.S. economy grew less than forecast in the first quarter as a drop in
defense outlays undercut the biggest increase in consumer spending in two
years.
•
Defense spending dropped at an 11.5 percent annualized pace following a
22.1 percent plunge in the last three months of 2012.
•
Gross domestic product rose at a 2.5 percent annualized rate following a 0.4
percent fourth-quarter advance, according to data from the Commerce
Department issued in Washington. The median estimate of 86 economists
surveyed by Bloomberg called for a 3 percent gain.
•
Another report today showed consumer confidence fell in April, signaling that
households, which sustained spending last quarter by dipping into savings,
may not be able keep shopping at the same pace as tax increases start to
pinch.
•
The GDP report also showed price pressures remain contained. A measure of
inflation tied to consumer spending, the one tracked by Federal Reserve
policy makers, rose at a 0.9 percent annualized rate in the first quarter, down
from a 1.6 percent gain in the previous three months.
•
The lack of inflation means the Fed will probably maintain bond purchases
when it meets next week.
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Downward pressure on European bond yields
•
The release of purchasing managers’ indexes on the
23rd April showed that the euro zone’s private activity
was stagnant in March and Germany’s contracted.
•
The weak data pointed to further signs that the
European Central Bank, which has so far remained
resistant to quantitative-easing measures, could
embark on such a plan. The ECB is expected to
reduce its main refinancing rate by 25 basis points to
0.5 percent at its next meeting.
•
French 10-year yields were 2.6 basis points lower at
1.72 percent after a survey showing France's business
downturn eased more than expected in April
underpinned its bond prices.
•
Bond yields in Italy fell 11 basis points to 3.98% on
the 10-year note Tuesday, the first time since
November 2010 that they dropped below 4%, due to
news that Italian parliaments is on the verge to form
a government.
•
On the other hand, Spain’s bonds pared their
advance after Prime Minister Mariano Rajoy said he
would seek two more years to tackle Europe’s widest
budget deficit.
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Eurozone struggles to pull out of recession
•
Industrial production in Germany, France, Spain and Italy for February was released
during the week.
•
The German industrial production came out with a 0.5 % month-on-month increase
which was better than expected. But the January number was revised down to -0.6%
from 0.0% indicating that the economy struggled to recover from the crisis in January.
•
France came out 0.7% m-o-m which was better than expected. In Spain and Italy there
was a decline in industrial production in February.
•
However, Euro-zone industrial production rose 0.4% (seasonally adjusted) in February,
beating expectations for a 0.2% rise and up from the revised 0.6% decline in January.
Despite the monthly gain, eurozone industrial production was down 3.1% compared
with February 2012, the Eurostat statistics service said.
•
The Euro-zone has experienced five straight quarters of economic contraction, ending
with a 0.6% GDP decline in the fourth quarter. Markit said that based on its PMI
surveys, it sees no end to the recession in sight.
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U.K. Avoids Triple Dip Recession
•
Britain’s economy avoided a triple- dip recession in the first quarter with
expansion that exceeded economists’ forecasts. U.K. gross domestic product
grew 0.3 percent in the first quarter. The median forecast of economists in a
Bloomberg News survey was for growth of 0.1 percent. The pound surged.
•
Services expanded 0.6 percent in the first quarter from the previous three
months, boosted by distribution, hotels and restaurants, the statistics office
said. Production increased 0.2 percent, led by a 3.2 percent surge in mining
and quarrying, while construction shrank 2.5 percent.
•
Chancellor of the Exchequer George Osborne said that the data is an
encouraging sign that the economy is healing, a week after he defended
austerity measures following a call by the International Monetary Fund to relax
fiscal tightening.
•
The Treasury and Bank of England yesterday extended their credit- boosting
program and warned that risks of renewed stresses in bank funding markets
remain because of the euro-area crisis.
•
The Bank of England is currently focusing stimulus efforts on its Funding for
Lending Scheme, which began in August to give banks access to cheaper
funding provided they pass on the savings to businesses and consumers.
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US stocks drop as GDP figure disappoints
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Major Currencies & Commodities Appreciated against USD
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Major Interest Rate Forecasts
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The Week Ahead,,,
12
The Week Ahead,,,
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Central Bank Meetings Calendar
Calendar for upcoming meetings of main central banks :
Central Bank
Month
Current Rate
Expected Rate
Decision
US Federal Reserve (FOMC)
May 1
0.25%
0.25%
European Central Bank (ECB)
May 2
0.75%
0.75%
Bank of England (BoE)
May 9
0.50%
0.50%
Bank of Japan (BOJ)
May 22
0.10%
0.10%
Swiss National Bank (SNB)
June 20
0.00%
0.00%
Bank of Canada (BOC)
May 29
1.00%
1.00%
Reserve Bank of Australia (RBA)
May 7
3.00%
3.00%
Reserve Bank of New Zealand (RBNZ)
June 13
2.50%
2.50%
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Regional
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Egypt sees 3.8% growth in fiscal year from July
•
Egypt said its economy will grow by 3.8 percent in
the fiscal year starting in July as ministers outlined
the 2013/14 budget to parliament on Tuesday.
•
The forecast delivered by Planning Minister Ashraf
Al-Araby to the upper house of parliament was
slightly below his most recent prediction of 4 percent
growth next year but well above the 2.5 percent the
government expects in 2012/13.
•
Finance Minister Al-Mursi Al-Sayed Hejazy detailed
proposed tax increases and spending cuts, including
plans to save 36.3 billion Egyptian pounds ($5.25
billion) by rationing the distribution of subsidised fuel
using smart cards.
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IMF deal in 'coming weeks'
•
Talks between the IMF and an Egyptian delegation including
Central Bank Governor Hisham Ramez, Finance Minister Morsi AlSayed Hegazi and Planning Minister Ashraf Al-Arabi took place over
the weekend.
•
A statement said that the Egyptian government was "firmly
committed to addressing its economic and financial challenges
with the objective of restoring sustained and socially balanced
growth, and they are already taking encouraging actions in this
direction.“
•
"WORK will continue with the objective of reaching agreement on
an IMF stand-by arrangement to support the authorities' national
economic programme in the coming weeks," IMF Managing
Director Christine Lagarde and Egyptian finance officials said in a
joint statement issued last Sunday.
•
Egypt's economy is suffering from a drain of foreign currency
reserves and a ballooning budget deficit, and the country is
experiencing social unrest due to political instability.
•
Observers believe an IMF deal would help shore up investors'
confidence in the economy and assure them that the country is
serious about adopting economic reforms at the top of which are
cutting fuel subsidies and increasing taxes.
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GCC Economic News Highlights
•
Minister: UAE GDP to grow 4%: Sultan Bin Saeed Al
Mansouri, the UAE Minister of Economy, said that the
UAE Gross Domestic Product (GDP) will grow above 4
per cent by the end of this year. The UAE’s solid
economic growth is forecast to continue in 2013
despite the global financial crisis and the slow
recovery in the developed nations, he said. “The
trade, logistics and services will lead the UAE growth,”
Al Mansouri said.
•
Sukuk issuance to hit USD275bn by 2013-end: The
volume of sukuk (Islamic bonds) issued by end of the
first quarter of 2013 reached $34.2 billion, increasing
on a quarterly based rate at 21.5 percent, after an
abundant year that witnessed a 54 percent increase in
issuance. Sovereign issuances continue to dominate
sukuk issuance, followed by issuances of corporates,
then sub-sovereign authorities. The sukuk issuance is
expected to reach $275 billion by the end of the year.
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Comparative MENA Markets
For the period 18/04 – 25/04
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Locally
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Local interest rates forecasts and major developments
•
Excess liquidity has continued its upward
trend, while the reversal trend from
Dollar to Dinar has intensified.
•
Easing pressures on the external sector is
anticipated to continue; though at a
slower pace due to high oil bill & delay of
Eurobond issuance till end of 2013.
•
Extra grants are also expected amid King
Abduallah’s visit to Washington; mainly
to help Jordan hosting Syrian refugees.
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Jordan’s oil bill for February Up
•
Jordan’s oil bill for the month of February rose to 387.7 million JD in
2013, compared to 334 million JD in 2012, despite international oil
prices falling by approximately 10%.
•
Factoring in the fact that Brent oil prices fell by 10% between
February this year and last year, the oil bill actually increased by 87.1
million JD.
•
Comparing Jordan’s oil bill for the first 2 months of this year to last
year, we find that oil imports fell by approximately 21% to reach
650.5 million JD from 822.7 million JD in 2012.
•
Therefore, we can conclude that the rise in the oil bill for the month
of February is a result of unsteady levels of Egyptian gas reaching
Jordan, prompting the Jordanian government to resort to oil to meet
its electricity needs. Moreover, The increasing number of Syrian
refugees have also put upward pressure on Jordan’s oil bill.
•
In other news, This week, the Department of Statistics released
figures showing that Jordan’s trade deficit decreased by 2.90% during
the first 2 months of the year, compared to the same period last
year. The decrease in deficit was caused by both a 2.5% rise in
exports and a 1.0% fall in imports
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Amman Stock Exchange
For the period 21/04 - 25/04
ASE free float shares’ price index ended the week at (203.3)
points, compared to (2062.9) points for the last week,
posting a decrease of 1.33%. The total trading volume
during the week reached JD(54.7) million compared to
JD(73.6) million during the last week. Trading a total of
(55.7) million shares through (21,552) transactions
The shares of (184) companies were traded, the shares
prices of (55) companies rose, and the shares prices of (103)
declined.
Top 5 losers for the last week
Top 5 gainers for the last week
Stock
% chg
Stock
% chg
Arab Real Estate Development
20.00%
International Cards Company
(25.45%)
Arab Company for Investment Projects
19.23%
United Arab Investors
(20.00%)
Jordanian Expatriates Investment Holding
6.00%
Jordan Clothing Company
(17.65%)
Jordan Kuwait Bank
5.77%
South Electronics
(16.67%)
Masafat For Specialized Transport
4.92%
Jordan Masaken For Land & Industrial Development Projects
(16.44%)
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Local Debt Monitor
Latest T-Bills

As April 14, the volume of excess reserves, including the overnight window deposits held at the CBJ
JD(2,726) million.
3 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
29/2011
14/12/2011
14/03/2012
50
2.898%
28/2011
12/12/2011
12/03/2012
50
2.844%
6 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
02/2012
14/02/2012
14/08/2012
50
3.788%
01/2012
23/01/2012
23/01/2012
50
3.433%
27/2011
08/12/2011
08/06/2012
50
3.232%
9 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
05/2012
04/03/2012
04/12/2012
75
4.285%
04/2012
29/02/2012
29/11/2012
75
4.229%
03/2012
22/02/2012
22/11/2012
75
4.169%
1 year T-Bills
Issue Date
Maturity Date
Size - Million
Coupon (%)
03/2013
26/02/2012
26/02/2014
70
6.750%
02/2013
14/02/2012
14/02/2014
50
6.750%
01/2013
27/01/2012
27/01/2014
70
6.750%
22/2012
24/12/2012
24/12/2013
60
6.750%
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Local Debt Monitor
Latest T-Bonds Issues
2 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T2613
28/04/2013
28/04/2015
50
6.039%
T2213
10/04/2013
10/04/2015
75
6.604%
T2113
08/04/2013
08/04/2015
50
6.788%
T2013
04/04/2013
04/04/2015
50
6.950%
3 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T2313
17/04/2013
17/04/2016
75
6.98%
T1913
31/03/2013
31/03/2016
75
7.770%
T1813
27/03/2013
27/03/2016
75
7.958%
4 year T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T0312
15/01/2012
15/01/2016
37.5
7.246%
T4211
16/11/2011
16/11/2015
50
6.475%
5 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T2513
24/4/2013
24/4/2018
75
7.585%
T0712
11/03/2012
11/03/2017
75
7.750%
Public Utility Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
PB55 (Water Authority)
05/09/2012
05/09/2015
26
8.134%
PB005 (Housing & Urban Development)
29/07/2012
29/07/2015
20
7.966%
PBO12 (National Electricity)
26/04/2012
26/04/2017
150
7.724%
25
Prime Lending Rates
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
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