reports
- Kiti Pantskhava
Ukraine's winners and losers from the post-US election rally
Ukraine has been one of the best performing emerging markets in the post-US-election rally. Sovereign bonds lead the way, tightening 100-150bps in November and outperforming EM indices, despite uncertainty over IMF funding and the devastating effect of coronavirus on the Ukrainian economy. Corporate bonds have also rallied, following the sovereign, but some divergence has emerged according to credit resilience. Bonds issued by the state-owned entities, Ukrainian Railways (RAILUA) and Naftogaz...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Ethiopia’s conflicting reports, Nigeria FX woes, Romanian election and...
In Focus: Ethiopia — Conflicting reports on the state of the conflict * The federal government claims it has regained control of the Tigray region, but the TPLF says fighting will go on * Bonds have recovered from their initial selloff, but have underperformed as markets bake in a political risk premium * We think recent price action is justified and, while the fundamental outlook is positive, risks will remain; retain Hold Read the full report here. Recap of the week’s key cr...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Kurdistan E&P bonds lag, low EM yields, 2021 global investment themes ...
IN FOCUS: KURDISTAN E&P BONDS LAG EM AND IRAQ RECOVERY * Iraq sovereign bonds rallied after the US election, but the Kurdistan oil and gas segment was overlooked * Tensions are elevated between the KRG and the federal government as disagreements deepen over Kurdistan oil exports * We upgrade DNONO 23s to Buy; reiterate Hold on GULFKY, HKNENG, GENLLN, DNONO 24s; and downgrade SNMCN, OILFLO to Sell Read the full report here. RECAP OF THE WEEK’S KEY CREDIT RESEARCH Global Investm...
- Kiti Pantskhava
Kurdistan E&P bonds lag EM and Iraq recovery
EM bonds have rallied sharply since the US election and Pfizer’s successful vaccine trials. Iraq has been among the top outperformers in the sovereign space, but corporate bonds associated with the country have shown only a muted reaction to the positive news. Bonds of the exploration and production (E&P) companies operating in the Kurdistan Region of Iraq (KRI) have seen mixed performance, but none have kept apace with the benchmarks. Renewed tensions between Kurdistan and the federal gover...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Zambia default, Suriname seeks deferral, IMF SDR allocation and more
In Focus: Zambia defaults after creditors reject standstill * Bondholders rejected consent solicitation on Friday, which pushed Zambia into default after failing to pay coupon * Rejection is unsurprising, with Zambia yet to demonstrate progress on debt transparency or IMF funding * EMTA recommends that the bonds should trade flat, and we think prices will remain stable as creditors wait patiently for acceptable terms; upgrade from Sell to Hold Read our recent report here. Reca...
- Kiti Pantskhava
Global Ports: Weak Q3 – upside in bonds unlikely to be realised soon; ...
FINANCIALS CONTINUE TO DETERIORATE Global Ports announced weak 9m 20 financials, posting US$44mn in cruise and commercial port revenues, a 52% yoy decrease, and US$16.5mn in adjusted EBITDA, a 73% yoy decrease, as cruise ports remained largely closed and activity at commercial ports reduced. Net leverage increased to 12x and covenant net leverage was well above the debt incurrence threshold of 5.0x. The refinancing of the U$S250mn 8.125% notes due November 2021 is a concern given a recently ...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Suriname restructuring prospects, lira rally, Venezuela-US relations a...
In Focus: Suriname — Restructuring prospects as new government seeks standstill * Newly elected government seeks a debt standstill as a prelude to a restructuring after inheriting an economy in crisis * Strong policy signals, IMF engagement, creditor coordination and oil could mitigate large losses implied by high debt * We retain our Hold on the 2026 eurobonds, which already trade at distressed prices, with risks seemingly evenly balanced Read the full report here. Recap of ...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
US election outcome and EM impact, Sri Lanka back to Buy, Ethiopia on ...
In Focus: Sri Lanka — Back to Buy as the pessimism is excessive * Markets have swung from irrational exuberance to excessive pessimism, with eurobonds down c35% in two months * Debt outlook worse but BOP has improved, with default unlikely for now and recovery value likely above current prices * Selloff has opened a new window to buy; we upgrade to Buy again on Sri Lanka 6.85% 24s and add Buy on Sri Lanka 21s Read our recent report here. Recap of the week’s key credit research...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Key themes from IMF meetings, Suriname misses coupon payment, SA budge...
In Focus: IMF/WB virtual Annual Meetings — 8 key themes * We attended the IMF/World Bank Annual Meetings (this edition virtual) over the week of 12-16 October, hosting a number of conference calls with IMF mission chiefs, resident representatives and officials from various country delegations – our meetings covered some 16 countries in all. * This report relates some of the ideas that came out of those meetings, and updates our views on the sovereigns that we cover. Our views are group...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Ukraine IMF meeting, Naftogaz pulls out of bond sale, Nigeria protests...
In Focus: Ukraine: Another IMF review, another delay – notes from virtual meetings * IMF review schedule now delayed as government's commitment to reform is called into question * Key areas of focus are central bank independence, anti-corruption framework, corporate governance and 2021 budget * Not clear when review will be completed, which could further complicate the already challenging financing outlook Read our recent report here. IMF/WB annual meetings: More notes from ou...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Ghana's slow fiscal consolidation, Zambia Q&A, Iraq risks rise and mor...
In Focus: Ghana — Slow pace of fiscal consolidation a key risk post-election * Elections, now only two months away, will be a contest between incumbent Nana Akufo-Addo and ex-president Mahama * Ghana has been hit hard by the pandemic while policy space is becoming limited, posing a challenge for whoever wins * The plan to take four years to return the fiscal deficit to pre-Covid levels seems less ambitious than most Read our recent report here. Recap of the week’s key credit ...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Zambia investor presentation, Laos debt, Azerbaijan-Armenia clash and ...
IN FOCUS: ZAMBIA'S INVESTOR PRESENTATION KICKS OFF AMBITIOUS RESTRUCTURING TIMELINE See also: Zambia — Botched budget a bad signal for bonds; downgrade from Buy to Sell * Tuesday’s investor presentation was light on new info; Zambia hopes to conclude IMF and restructuring talks by the end of the debt deferral on 14 April, which seems unlikely. * We revised our recommendation from Buy to Sell on Zambia 24s, with more onerous restructuring now likely required. * Zambia's 2020 budg...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Zambia interest deferral, Sri Lanka bonds, Nigeria rates, Argentina GD...
IN FOCUS: ZAMBIA — INTEREST DEFERRAL IS FIRST STEP TO RESTRUCTURING * Zambia seeks approval for six-month deferral of eurobond interest to make space to negotiate broader restructuring * May create precedent for PSI for distressed credits seeking DSSI relief, with comparability not previously enforced * We still think bondholders are well-positioned to negotiate a light restructuring, and retain Buy on Zambia 24s Read the full report here. RECAP OF THE WEEK’S KEY CREDIT RESEAR...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Lebanon crisis, Tullow Oil, Turkey downgrade, Belarus protests and mor...
IN FOCUS: HOW TO FIX LEBANON'S HYPERINFLATION AND CURRENCY CRISIS * Lebanon is experiencing hyperinflation (365% yoy); the only way out of crisis is a currency board or dollarisation. * The free float doomed to fail but a currency board is not yet on the agenda; a fiscal and monetary straitjacket is necessary. * Inflation is also running above the reported level in other countries, including Brazil, Turkey and Nigeria. On 15 September, we hosted a webinar with Professor Steve ...
- Kiti Pantskhava
Tullow Oil: Initiation — When liquidity threatens solvency; Hold
Initiate with Hold. Tullow Oil’s liquidity issue came to the fore after the company released weak H1 20 financial results and warned about a risk of default. The main problem is liquidity. Current oil prices are too low for the company to break even on the FCF basis before hedging that makes it difficult to refinance the upcoming bond maturities, US$300mn in July 2021 and US$650mn in April 2022. The refinancing question has to be addressed and resolved before March 2021 to avoid default on th....
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
How to play the Naira card, Sri Lanka prioritises political over econo...
In Focus: Nigeria — How to play the Naira card * CBN resumes FX sale in Investors and Exporters’ window and parallel markets * CBN is well able to settle outstanding foreign portfolio investors backlogs * The wild card for FPIs unable to exit is to buy OMO bills at auctions and sell in the secondary market for capital gains Read the full report here. Recap of the week’s key credit research Sri Lanka: Rajapaksas prioritise political over economic reform * As expected, the R...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Ethiopia growth model, Lebanon’s new PM, call with Nigeria's IMF mis...
In Focus: Ethiopia — Vast potential but growth model adjustment needed This note builds on concepts outlined in our recent Sub-Saharan Africa Manufacturing Scorecard to dissect Ethiopia’s growth model. * Ethiopia has been the fastest growing economy in the world this decade, but growth will be hard to sustain post-Covid-19 * Industrialisation hype not reflected in the data, and momentum is fading, with need to shift to private sector-led model * Still positioned to become SSA man...
- Kiti Pantskhava
- Luke Richardson
- Patrick Curran
- Stuart Culverhouse
Turkey currency crisis, IMF moral imperative, cruises come back for Gl...
In Focus: Charting Turkey’s currency crisis Following our note analysing Turkey’s corporate bond sell-off (seehere) and the CBRT's latest decision to leave its policy rate unchanged "while continuing with liquidity measures", we illustrate how Turkey got here and dissect the macro implications via a series of charts. * Turkey’s credit-fuelled growth model has led to unsustainable credit growth, high inflation and external imbalances * Covid-19 triggered a currency adjustment, with CB...
- Kiti Pantskhava
Global Ports: Cruises are coming back, refinancing plans require clari...
Reiterate Hold. Q2 20 performance for Global Ports Holding (GPH), the world's largest cruise port operator, was predictably weak as cruise ports remained mostly closed and activity at the commercial port Akdeniz was substantially reduced due to the economic slowdown in China, the key export destination for the vessels loaded at the port. The company's response to the rapidly changing situation helped to cut costs quickly and generate positive operating cash flows, albeit at a significantly re...
- Kiti Pantskhava
Nostrum Oil: Q2 20 surprises with steady production; no updates on res...
Reiterate Hold. Nostrum Oil reported Q2 20 financial results delivering higher sales volumes than implied by the production decline rate derived from management's FY 20 guidance. This supports revenues, EBITDA and cash flow temporarily, but does not change the basic premise of the investment case: Nostrum's upstream operations are too small to justify its high leverage. In H1 2O, the net debt-to-EBITDA ratio increased to 8.2x, and interest coverage reduced to 1.5x. The company initiated restr...
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