EM CEEMEA CREDIT: NAVOIM: new issue deal FV
May-07 08:54
Navoi Mining and metallurgical Company (NMMC) (NAVOIM; -/BB-/BB-)
New issue deal: USD500mn 5Y
IPT @ 7.375% yield area
FV @ 6.65% yield area
- We sketch our FV considerations looking at seasoned bonds as well as global peers and the sovereign curve. We see FV at z+308bp, indicatively T+272bp 6.65% yield area.
- Uzbekistan’s 100% state owned, gold mining champion NMMC has had plans for additional USD500mn Eurobond issuance in 2025 for a while. In Oct ‘24, NMMC issued a dual tranche USD with 4Y and 7Y benchmarks. In previous notes, we expected issuance to add granularity to the secondary curve. The proposed tenor does not extend the term structure further.
- For context, NMMC’s credit metrics show production reached 3.1Moz for FY24, +5.4% YoY. Rev’s were up almost +30% YoY at USD7.4bn, whereas All in Sustaining Costs (AISC) increased +13% YoY to USD979/oz. Adj EBITDA stood at USD4.6bn with 62% margin. Leverage remained moderate with net debt/EBITDA ratio reported at 0.5x (source: Co. reports).
- When looking for peers, we focus our attention on South Africa’s higher rated Gold Fields (GFISJ; Baa3/BBB-/-), who also issued in USD for a 7Y tenor yesterday (priced at T+175bp or z+221bp area). Gold Fields posted FY25 prod’n guidance in range at 2.25-2.45Moz and FY25 guidance for All in Sustaining Costs (AISC) in a range between USD1,500/oz and USD1,650/oz. Gold Fields boasts solid liquidity and financial position remain solid, with TTM net adj leverage reported at 0.59x end of 1Q25 (source: Co. reports).
- We also look at Peru’s similarly rated, diversified miner Buenaventura (BUENAV; -/BB-/BB). Buenaventura’s credit benefits from a low leverage profile. BUENAV tapped the primary market at the end of Jan ’25 to refi short-dated debt issuing a 7NC3 deal in USD.
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GERMANY: Merz Facing Pressure On Economy & Immigration In Coalition Talks
Apr-07 08:47
Reuters reporting comments from chancellor-in-waiting Friedrich Merz regarding the situation in financial markets, calls the situation "dramatic" and it "threatens to get worse, [it is] therefore more urgent than ever to restore international competitiveness...competitiveness must be at the centre of coalition talks." Talks between Merz's centre-right Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU), and the centre-left Social Democrats (SPD) on forming a governing coalition continue.
- The current economic and financial market instability is adding to pressure on all parties to reach a swift agreement that will see a new gov't come to power able to implement policy to ameliorate the impact (the current caretaker gov't of Chancellor Olaf Scholz is more limited in its political room for manoeuvre).
- Merz is not only facing pressure as a result of economic instability, but also political concerns within the CDU. Recent opinion polling has shown the far-right Alternative for Germany (AfD) gaining support, with the latest INSA poll showing the AfD level with the Union parties on 24%. This marks the first time the AfD has ever (jointly) topped a nationwide opinion poll. As INSA notes, this represents a "loss of support that has never been seen before in the period between the Bundestag elections and the formation of a government".
- This has seen pressure on Merz to hold firm in coalition talks with regards to not only economic policy but ensuring a hard line on immigration. The 'final round' of negotiations is set to get underway today.
GERMAN DATA: Chinese Dynamics / US Tariffs Provide Downside Risk [2/2]
Apr-07 08:37
- Looking ahead, the March rise in German IFO export expectations may be highly discounted after the US administration's tariff announcements last week.
- Outside of the downside risks of German exports to the US, also note that a significant downside driver to the German trade balance since 2022 were exports to China (they fell 26% when comparing the latest three months available to Jan-Mar 2022), while imports from the country broadly sidelined since 2023. This comes against the backdrop of reports (here, here) suggesting China has built significant manufacturing overcapacity in recent years, indicated by domestic supply rising faster global demand, rising numbers of lossmaking industrial firms in the country, as well as declining capacity utilization.
- Against the backdrop of high US tariffs on Chinese goods, this poses further downside risk to the German trade surplus (and industrial production), as a) there appears to be no imminent rationale for Chinese demand for German industrial products to pick up materially again and b) lower US demand for Chinese manufacturing exports might mean higher supply at lower prices of these products in Germany.
SCHATZ: Block trade
Apr-07 08:35
Schatz block trade, suggest seller:
- DUM5 ~13.55k at 107.705.
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