1. Interest Rate Monitor April 21, 2013

2. 2 Brief Overview  Inflation, monetary stimulus withdrawal and delay in Eurobonds may smooth decrease in interest rates. International MENA Region Local Economy  Interest Rate Forecasts Interest Rate Forecasts  Amman Stock Exchange Amman Stock Exchange  Local Debt Monitor Local Debt Monitor  Prime Lending Rates Prime Lending Rates Markets overview New and analysis US: US: Treasury yields lower amid weak global outlook and explosions Eurozone:Eurozone: Deviation continues between economic figures and government bonds’ yields Major Indices: Stocks Major Indices: Stocks drop due to economic negative outlook Commodities and Currencies: Commodities and Currencies: Gold started to recover lossed Central Bank Meeting Calendar Interest Rate Forecast The Week Ahead Higher yields and Cabinet reshuffle GCC News Highlights Comparative MENA Markets Japan: Japan: Japanese investors’ outflow expected to accelerate

3. 3 International

4. 4 US Treasury bond rates  Treasury yields decreased to lowest levels in 4 months close to 1.70% amid concerns of weaker growth in US and Chinese economies.  Retail data in the US was disappointing, while growth in China reached 7.7% in 1 st quarter compared to expectations of 8%.  Explosions in Boston have weighed on stock markets and increased appetite for safe treasury instruments.

5. 5 Downward pressure on European bond yields There is yet a deviation in performance between EU peripheral economies and bonds of those countries. While industrial and retail figures for the Eurozone were sluggish last week, most EU sovereign bonds’ yields went down; including Spanish and Italian government bonds. The last auction for Italian government bonds was covered strongly by retail investors, sending positive signals for debt markets. German bunds yields decreased as well, since most global economic figures expectations were missed, and due to week Eurozon figures. Easing in Japan is still urging investors to move for higher yielding assets; including those in Europe.

6. 6 Japanese investors outflows to increase in coming months  Since BOJ started its easing measures to attain its new inflation target of 2%, Japanese investors have decreased their net selling of foreign assets to reach JPY 331 Billion last week compared to JPY 1141 Billion one week before.  Japanese pensions’ investments outside Japan have also increased at the end of 2012.  The outflows of Japanese investors are anticipated to increase in coming months; which may result in price increase of international government bonds including those in Europe.  What can also proves the trend of investments’ outflows from Japan, is the JPY net short position in FX future markets, and the accompanied increase in EUR long positions.

7. 7 International Stock Markets: Down due to weak economic outlook

8. 8 Commodities & Currencies : Gold to start recovering losses

9. 9 Major Interest Rate Forecasts

10. 10 The Week Ahead,,,

11. 11 Central Bank Meetings Calendar Expected Rate Decision Current Rate MonthCentral Bank 0.25% May 1US Federal Reserve (FOMC) 0.75% May 2European Central Bank (ECB) 0.50% May 9Bank of England (BoE) 0.10% April 26Bank of Japan (BOJ) 0.00% June 20Swiss National Bank (SNB) 3.00% May 7Reserve Bank of Australia (RBA) 2.50% April 23Reserve Bank of New Zealand (RBNZ) Calendar for upcoming meetings of main central banks :

12. 12 Regional

13. 13 Egypt: Higher Yields & Cabinet Reshuffle The Egyptian Pound continued its deterioration, while yields on USD 2020 Egyptian government bonds continued to increase, amid continued uncertainty about negotiations on IMF Loan. In addition, the President is planning to change the government and governors of provinces in steps to mitigate political turmoil in the country. Egyptian government debt service is anticipated to increase by 30% next fiscal year; placing more pressure in government finances and growth plans. The government is also planning to issue EGP 3 Billion next week in 3 and 6 months bills at 13.70% and 14.65% respectively.

14. 14 GCC News  Oman stock market fall last week, mainly due to bank profits that came below forecasts.  UAE found to be the biggest capital exporter between other countries, with USD 55 Billion. Saudi Arabia came second with USD 26 Billion.  IMF cuts forecasts for MENA region growth to become 3.10% down form its expectation of 3% growth in October 2012.  The IMF forecast cut was partially due to lower oil prices, that are expected to continue falling if global recovery comes to be sluggish this year and the year after.  Nakheel; the real estate developer operating in Dubai, witnessed a 36% increase in net income as UAE’s property market rebounds.

15. 15 Comparative MENA Markets For the period 12/04 – 18/04

16. 16 Locally

17. 17 Local interest rates forecasts and major developments Excess liquidity has continued its upward trend, while the reversal trend from Dollar to Dinar is yet observed. Jordan has received the second trench of the IMF loan ($ 385 Million), and a new Kuwaiti deposit of $ 250 Million. The decrease in government bonds’ yields has started to weigh on JOD denominated deposits in the banking sector.

18. 18 Government Shift From Local to External Debt is Expected to Continue Weighing on Interest Rates  The shift will help reducing demand on local liquidity reducing accordingly interest rates.  Introducing the Sukuk market may lead interest rates lower as NEPCO may cover its finances through the JD 1 Billion Islamic excess liquidity.  Rates are expected to go down for government bonds, credit facilities and customer deposits

19. 19 Inflation, easing withdrawal and delay of Eurobonds may smooth the decrease in interest rates  Inflation may go beyond 10% if refugees numbers increase, and if the government increases electricity and water tariffs.  The IMF in its last statement made clear that current high benchmark rates set by the Central Bank of Jordan are needed to face inflationary pressures.  If CBJ decides to withdraw the monetary stimulus injected in the market last year, excess liquidity may go down; which will reduce downward pressures on market interest rates.  Delaying the Eurobond till end of year means that more pressure will be placed on domestic liquidity by government borrowing in coming months.

20. 20 Amman Stock Exchange For the period 14/04 – 18/04 ASE free float shares’ price index ended the week at (2062.9) points, compared to (2091.4) points for the last week, posting a decrease of 1.36%. The total trading volume during the week reached JD(73.6) million compared to JD(81.7) million during the last week. Trading a total of (71.80) million shares through (30,881) transactions The shares of (179) companies were traded, the shares prices of (55) companies rose, and the shares prices of (98) declined. Top 5 losers for the last week Stock % chg Arab real estate development (28.57%) Al Amal financial investments (21.43%) Al-sanabel international for Islamic investments (19.75%) Union Tobacco & Cigarette industries (15.92%) International cards company (12.70%) Top 5 gainers for the last week Stock % chg United Arab Investors 25.00% Jordan Press Foundation/al-ra'i 17.43% Tuhama for financial investments 16.00% Jordan clothing company 13.33% Shareco brokerage company 6.45%

21. 21 Local Debt Monitor Latest T-Bills  As April 21, the volume of excess reserves, including the overnight window deposits held at the CBJ JD(2,711) million. Yield (%)Size - millionMaturity DateIssue Date3 months T-Bills 2.898%5014/03/201214/12/201129/2011 2.844%5012/03/201212/12/201128/2011 Yield (%)Size - millionMaturity DateIssue Date6 months T-Bills 3.788%5014/08/201214/02/201202/2012 3.433%5023/01/2012 01/2012 3.232%5008/06/201208/12/201127/2011 Yield (%)Size - millionMaturity DateIssue Date9 months T-Bills 4.285%7504/12/201204/03/201205/2012 4.229%7529/11/201229/02/201204/2012 4.169%7522/11/201222/02/201203/2012 Coupon (%)Size - MillionMaturity DateIssue Date1 year T-Bills 5.345%7515/04/201415/04/201304/2013 6.750%7026/02/201426/02/201303/2013 6.750%5014/02/201414/02/201202/2013 6.750%7027/01/201427/01/201201/2013

22. 22 Local Debt Monitor Latest T-Bonds Issues Coupon (%)Size - millionMaturity DateIssue Date2 years T-Bonds 6.604%7510/04/201510/04/2013T2213 6.788%5008/04/201508/04/2013T2113 6.950%5004/04/201504/04/2013T2013 Coupon (%)Size - millionMaturity DateIssue Date3 years T-Bonds 6.98%7517/04/201617/04/2013T2313 7.770%7531/03/201631/03/2013T1913 7.958%7527/03/201627/03/2013T1813 8.163%7525/03/201625/03/2013T1713 Coupon (%)Size - millionMaturity DateIssue Date4 year T-Bonds 7.246%37.515/01/201615/01/2012T0312 6.475%5016/11/201516/11/2011T4211 Coupon (%)Size - millionMaturity DateIssue Date5 years T-Bonds 7.750%7511/03/201711/03/2012T0712 7.489%5019/01/201719/01/2012T0412 Coupon (%)Size - millionMaturity DateIssue DatePublic Utility Bonds 8.134%2605/09/201505/09/2012PB55 (Water Authority) 7.966%2029/07/201529/07/2012PB005 (Housing & Urban Development) 7.724%15026/04/201726/04/2012PBO12 (National Electricity)

23. 23 Prime Lending Rates

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