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Tuesday, 30 June 2009

DP World Among Four Dubai Companies Downgraded by S&P, Moody’s

DP World Ltd., the Middle East’s biggest port operator, and three more companies controlled by Dubai’s government were downgraded as the emirate struggles to convince investors it has sufficient funds to repay their debt.

DP World, Jebel Ali Free Zone, a government-owned industrial park, and the Dubai Multi Commodities Centre Authority, a tax-free business park, had their credit ratings cut by Standard & Poor’s. Dubai Holding LLC, the state- controlled entity that is in talks to merge some of its units with Emaar Properties PJSC, was lowered at Moody’s Investors Service on concern the region’s property slump will continue.

“This reappraisal is the result of increased uncertainty regarding the government’s willingness to provide” cash support to state-owned firms in meeting their debt obligations, S&P said.

Iraqi oil

The foreign army moves out; the foreign oil men move in. Iraqis may fear their energy being sold off on the cheap, but need not worry. Terms for operating rights offered at auction on Tuesday for eight oil and gas fields were so harsh that two failed to find bidders. And the auction of the country’s giant Rumaila field almost collapsed – until BP stepped in and accepted a flat $2 fee per for each barrel of oil produced, half what it asked for.

In this case, Iraq has certainly got a good deal. If BP boosts Rumaila’s production to Baghdad’s 1.7m barrels per day target, it would take some $365m in fees a year, about a thousandth of annual revenues. Use company margins obtained elsewhere, and pre-tax profits might reach $40m – although that is before factoring in higher Iraqi costs, especially security. Even if BP more than doubles Rumaila’s production to its own heady target of 2.85m bpd, it would still only earn $120m a year, about 0.6 per cent of forecast group profits. In return, Iraq would have increased oil production by three quarters, without putting any capital at risk.

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UAE mega-bank merger hit by setback

The UAE's Federal National Council, the government's advisory body, on Tuesday failed to agree on a law governing the newly-created Emirates Development Bank, after members questioned the reasons behind the merger of the two smaller banks and the new state-backed bank's role.

Thirteen out of thirty one council members present at the meeting - the council's last before it adjourns for the summer - voted to review the law again from scratch at another meeting.

The FNC "needed more time to make sure how the bank will help develop the housing and industrial sectors", said Younis al-Khoori, the Ministry of Finance's director general.

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Emaar May Have to Raise Funds After Merger, Nomura Analyst Says

Emaar Properties PJSC, the Dubai property developer that announced a plan to combine with part of Dubai Holding LLC last week, may have to raise funds if it proceeds with the transaction, Nomura Holdings Inc. said.

Emaar, the Middle East’s biggest developer, is in talks to merge with three units of Dubai Holding, a state-controlled organization that’s also based in the sheikhdom. The deal would be the largest in the Dubai property industry this year.

“Emaar may have to raise equity, and possibly a lot, to support its private development counterparts,” Chet Riley, a Dubai-based analyst at Nomura, wrote in a note to clients.

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Emirates NBD Adds 4 Billion Dirhams to Tier I Capital

Emirates NBD PJSC, the United Arab Emirates’ biggest lender by assets, sold 4 billion dirhams ($1.09 billion) of bonds to the Dubai government to meet a capital target set by the central bank.

It will pay interest of 6.45 percent for five years and a floating rate thereafter on the “Tier I” securities sold to Investment Corp. of Dubai, a government-owned holding company and the bank’s controlling shareholder, the lender said today in an e-mailed statement.

The sale lifts Emirates NBD’s Tier 1 capital ratio to over 11 percent, from 9.4 percent in December, the statement said. The central bank set a June 30 target of 11 percent for Tier 1 capital, a gauge of a lender’s ability to absorb losses.

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The Green Brief #13 (June 29) (Re-post)

These are the important happenings that I can positively confirm from Monday, June 29 in Iran.

1. There was a human chain planned for today. The plan had been to form it between Tajrish Square and the Railway; however, the route was guarded heavily by Basijis, plainclothesmen and security forces. Nonetheless, people at gathered Mellat Park, Valiasr Field, Vanak and Valiasr Avenue and were trying to form a human chain. The police tried to disperse the crowd and stop the human chain from being formed. There were reports of clashes as well which cannot be fully confirmed. Reports of police smashing people’s windows for honking their horns and slashing their tires with knives.

2. Cell phone services were cut off around Valiasr as well as other parts of Tehran. The Basiji had Daneshjo Park under their control and helicopters were flying all over the place, especially over Valiasr. Today was one of the few times when the government cut off phone lines in order to disrupt communications between protesters and hinder their coordination of the event. During the event, several people were arrested as well. Most of Tehran was crawling with Basijis carrying sticks, some on motorcycles sporting camouflage vests. Protesters and some other people were wearing green wristbands in support of Moussavi.

3. Larijani, the speaker of the parliament today said that CNN had given money and cell phones to protesters to portray a wrong image of Iran. He added that the unrest was not an important event and it will be easily overcome and that it was just another experience for the Islamic Republic.

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Private investors sell 49% stake in EIB to government

Private sector investors yesterday agreed to sell their 49 per cent stake in the Emirates Industrial Bank (EIB) to the Federal Government.

The Ministry of Finance previously owned 51 per cent of the bank and the government now becomes the sole owner. A number of investors held 49 per cent of the stake, who agreed unanimously to the sale.

The move is intended to speed up the merger of EIB with Emirates Real Estate Bank (EREB) to create Emirates Development Bank (EDB), which will have a capital of Dh10 billion. The formation of EDB was approved by the Cabinet last week and the new bank is expected to be wholly-owned by the government, which has pledged to contribute Dh5bn to the venture. The merger will be one of the largest to have taken place in the UAE's financial sector.

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S&P gives 'developing' rating to Emaar

International rating agency Standard & Poor's yesterday said it has revised the CreditWatch implications for 'BBB+' long-term credit ratings on property developer Emaar to 'developing' from 'negative' following the announcement of merger talks with Dubai Holding's property subsidiaries.

The rating action reflects the prospective benefits on Emaar's credit profile from a merger with the real estate businesses of Dubai Holding Commercial Operations Group (DHCOG), said a statement. "The developing implications also reflect the downward pressure on the ratings from the weak Dubai real estate market if the merger is not completed," said Alf Stenqvist, Credit Analyst at S&P.

The current ratings on Emaar reflect the group's important role and strong position in the Dubai property development market as one of three government-related master developers, and its strong relationship with, and minority ownership by, the Government of Dubai (not rated). The ratings also reflect the group's low debt leverage and strong asset base. The main constraining rating factors include the inherent risks in the cyclical property development industry and the group's large exposure to the weakening of the real estate market.

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CDS spreads halve on improved confidence

Though the credit default swap (CDS) spreads of Dubai has fallen by about 50 per cent from the levels of 1000 basis points (bps) to about 500 basis points since February, indicating a substantial fall in the risk perception on the emirate, this has failed to reflect on Dubai bond yield so far.

While Abu Dhabi bond is currently trading at about five per cent yield, the Dubai bond, launched in 2008 and maturing in 2013, is trading at yields as high as 8.5 per cent.

During the same period, the Abu Dhabi CDS has dropped from 450 bps to just about 230 bps.

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Porsche rejects VW offer as Qatar seeks deal

The battle over the future of Porsche Automobil Holding SE escalated on Monday when the German sportscar maker announced it received a written offer from state-owned Qatar Investment Authority over a possible stake sale, just hours after it rejected an offer from Volkswagen AG.

"We received an offer from Qatar to acquire a stake and take over (Porsche's) options on Volkswagen stock," Porsche spokesman Albrecht Bamler said.

The offer will form the basis for upcoming talks with Qatar on the purchase price, he said, adding that the Porsche and Piech families - which control 100 percent of Porsche's voting stock - still have to examine the Qatari proposal.

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Jail term for issuing bad cheque

An Egyptian businessman has been jailed for three years for issuing a $6.18 million (about Dh22.7 million) cheque which bounced in Dubai, although he claimed that he signed it in Cairo.

The Dubai Court of Misdemeanour found the renowned Egyptian businessman, N.B., guilty of signing a bad cheque. Meanwhile, he still undergoes a second trial for signing another bounced cheque for $1.83 million.

Presiding Judge Omar Ahmad Abdul Baki, who pronounced Monday's judgment, also referred the suspect to the Dubai Civil Court where he faces a civil lawsuit.

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IPIC signs $5 bln syndicated loan -banker

Abu Dhabi government-owned International Petroleum Investment Co (IPIC) has signed a $5 billion syndicated loan, increased from a launch amount of $3.5 billion, banking sources close to the deal said on Monday.

Co-ordinating bookrunners Bank of Tokyo-Mitsubishi UFJ, HSBC and Santander invited banks to join the deal with commitments of $400 million and despite the increased final amount, lenders have been scaled back by around 30 percent, the sources said.

The loan, which will be used to finance IPIC's recent acquisitions, as well as for general corporate purposes, was launched in May.

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Towers take turn for the worse

At the height of the property boom, developers in Dubai competed to outdo each other with increasingly grand designs. But no rivalry was as interesting as the race to build buildings that rotate, giving home owners 360-degree views of the world.

For an industry obsessed with views, it was the ultimate prize that would translate into large premiums and healthy profits.

While builders in Brazil and the US had built smaller rotating buildings, three developers in Dubai announced buildings that would have put the UAE in the architectural vanguard.

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IEA doubts Iraqi oil target

Baghdad’s plan to more than double Iraqi oil output in the next eight years may be too ambitious, the International Energy Agency (IEA) said yesterday on the eve of the country’s historic first post-war auction of oil contracts to foreign firms.

“Despite tremendous international interest for the country’s oil development projects, official plans to increase production by 3.5 million barrels per day (bpd) to reach 6 million bpd by 2017 appear over-optimistic given the many political and security risks that continue to challenge the government and industry,” the energy adviser said.

Taking a “very conservative” view for its medium-term forecast period, ending in 2014, the IEA said Iraqi oil output could slip to 2.2 million bpd by 2011 from about 2.4 million bpd currently, due to an “unexpected accelerating decline” in production from the country’s big southern oilfields. With drilling programmes not expected to deliver results until later in the period, the agency projected capacity rising to 2.7 million bpd by 2014.

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New funds put bank on target

Emirates NBD is close to securing a Dh3.5 billion ($US953 million) government cash injection that will allow the UAE’s largest lender to meet new capital adequacy targets set by the Central Bank late last year.

Most of the cash is expected to come from the Government of Dubai, which owns 56.6 per cent of Emirates NBD through the Investment Corporation of Dubai (ICD), its investment arm.

The bank declined to comment on the funds but analysts expect an announcement to be made today. ICD could not be reached for comment.

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UAE victory hailed as big step forward

Environmentalists celebrated the announcement that Abu Dhabi would be home to a new green-energy agency, saying it would improve the country’s image and encourage ecological efforts worldwide.

Winning the International Renewable Energy Agency (Irena) was gratifying, they said.

“Our efforts from all these years have been recognised,” said Majid al Mansouri, secretary general of the Environment Agency-Abu Dhabi. “Abu Dhabi is something we are proud of; we have initiatives that are being approved worldwide. To have such a prestigious new agency will reflect positively on Abu Dhabi.”

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Qatargas to supply LNG to Poland

The Polish Oil and Gas Company signed a deal on Monday with Qatargas for deliveries of liquefied natural gas (LNG) in a move that lessens Poland's reliance on Russian supplies.

Qatar government representatives signed the agreement with Polish officials in Qatar, Treasury Minister Aleksander Grad told the Polish Press Agency PAP.

The deal is effective for 20 years and will yearly deliver 1.5 billion cubic meters of gas in an agreement worth some US$500 million a year.

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Face-to-face: What's the future for the UAE?

Should there be a focus on government-funded projects to pull the industry through the downturn?

Yousuf Sharaf, Sharaf Industries, Managing Director: Projects like the metro, which has been funded by the government, will continue but will be slower than before just like any other projects. It all depends on the strategies of the business.

Salvatore Saker, Green Precast CEO: The government funded projects are pretty much holding the economy together. In times like this, where the private investor hangs onto his cash, it is the leaders, in many markets, that realise it is up to themselves to keep the economy thriving and providing work. Housing in most countries dominates between 30% to 60% of any economy and it certainly will for the next 15 years.


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Ratings on Arcapita withdrawn

ArcapitaImage via Wikipedia

Standard & Poor’s on Monday withdrew its ratings on Arcapita, a Bahrain-based Islamic investment group, six months after the recession-hit institution was downgraded to junk status.

Shortly before the withdrawal of the rating, which was requested by Arcapita, S&P affirmed its negative outlook on the group. This was based on the bank’s high leverage and its pressured liquidity position, the agency said on Monday. “The ratings reflect our opinion of Arcapita’s stand-alone credit profile and do not include any uplift for extraordinary external support.”

Arcapita has been recapitalising its business since January by tapping shareholders and other funds. Earlier this month, the investment group sold Church’s Chicken, a fast-food chain, to Friedman Fleischer & Lowe, a San Francisco-based private equity group, in one of the biggest US exits of the year.

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Emaar move prompts investor unease

When Emaar Properties announced its merger talks with three government- related developers, it described the move as marking the start of a “new chapter in the annals of real estate globally”.

Yet the initial reaction of investors in the Middle East’s largest developer was less favourable. Emaar’s shares tumbled almost 10 per cent on Sunday, the day of the statement, and a further 2.1 per cent yesterday.

Their concerns are that their holdings might be diluted and about the benefits of an alliance with the three smaller developers – Dubai Properties, Sama Dubai and Tatweer – that have less of a record than Emaar, analysts say.

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Drop in Gulf inflation raises deflation fears

It is not long since soaring inflation was the scourge of the Middle East – the number one concern of policymakers. When living costs rose in 2007 and 2008, workers protested as soaring food prices and rents threatened to cloud the benefits of bumper oil revenues.

Yet in recent months the Gulf has found itself in a very different environment as inflation has dropped from double digits to low single figures, causing some economists to raise the spectre of deflation.

Widespread job losses have replaced the pay rises and labour shortages of the years of plenty: the property bubble has burst, global commodity prices have corrected substantially and banks have experienced a liquidity squeeze.

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Emaar Merger Signals Dubai Inc. Consolidation,M&A Wave

The merger of Dubai's Emaar Properties PJSC (EMAAR.DFM) and three state-controlled property firms could prompt a wave of consolidation in the struggling emirate, analysts say.

"We believe M&A will pickup over the next 18 months in addition to questions around the standalone survivability of several developers," said UBS AG analyst Saud Masud. "We would not rule out mergers within the three key holding entities as well as cross-holding consolidation as Dubai Inc. seeks to strengthen its balance sheet," he said.

The planned merger between Emaar and Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC is Dubai's boldest step yet to stem the collapse of the emirate's real estate market where prices have tumbled up to 40%.


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Monday, 29 June 2009

U.A.E. Says Algosaibi Problems Are Gulf Unity ‘Test’

The way Gulf states manage the fallout from the Algosaibi group, which owes 34.6 billion Saudi riyals ($9.2 billion) to banks, is a test of the cooperation needed to build a unified currency, the U.A.E. central bank governor said.

“If we have a common market, we should know how to deal with such cases,” Sultan Bin Nasser al-Suwaidi said in an interview in Basel, Switzerland today. “We should meet as regulators and we should discuss the issue and discuss a solution. All these things have not happened.”

The U.A.E. on May 20 became the second country in the six- member Gulf Cooperation Council to pull out of a planned monetary union, after Oman withdrew two years ago. The exit of the U.A.E., the second largest Arab economy, was a blow to the project and came after Riyadh, the Saudi Arabian capital, was chosen as the spot for a future Gulf central bank.

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UAE – Federal guarantee of bank obligations (PDF)

•A federal guarantee of UAE bank obligations would help shore confidence in the UAE banking system by demonstrating continued sovereign support to the sector

•A federal guarantee would also help the banks meet their refinancing needs in 2009 and 2010

•However, the devil will be in the detail

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Omar El-Quqa’s Resignation Sets a Precedent of Accountable Leadership (Re-post)

The Kuwaiti financial society will remember yesterday June 28th as the day Mr. Omar M. El Quqa, Advisor and former EVP of Global Investment House (GIH), resigned. Ironically, this day coincided with his and Global’s 11-year anniversary.

Mr. El-Quqa sent his resignation in the form of a letter to his co-workers. He began the emotional letter by stating that although he doesn’t approve of the new restructuring plans and believes that he is critically needed as an executive rather than a mere advisor; he agreed to the new position to alleviate the external pressures on Mrs. Maha Al Ghunaim. He further stated that Global promised him of a strategic role in the decision making process. However, Global broke their promises by excluding him from all committees and the decision making process.

Continuing on, Mr. El-Quqa shared his disappointment with Global for neglecting his efforts during the past 11 years and the fact that he significantly contributed to the transformation of Global into the best investment house in the MENA region. Nevertheless, Mr. El-Quqa praised Global and cherished his experience in it by stating that Global is not just a company but a vital part of who he is.

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UAE may have seen 'bottom of downturn,' says Morgan Stanley

The UAE's economy, the second-biggest in the Gulf, may have reached the 'bottom of this downturn' and should see a 'mild recovery' in 2010, Morgan Stanley said.

The recent improvement in global economic momentum, the rise in oil prices, and the stabilization in domestic markets are helping the country’s economy to recover from a slump led by the collapse in real-estate and energy prices, Morgan Stanley’s Dubai-based analyst Mohamed Jaber wrote in a note today.

“The strength of the recovery will depend on the momentum for global growth and the timely resolution of imbalances in its domestic real-estate and credit markets,” Jaber wrote.

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Anglo seeks Dubai cash to develop Brazilian ore project

Anglo American, the mining conglomerate that is being stalked by Xstrata, its Swiss-based rival, is in talks with Dubai Natural Resources World to co-develop iron ore assets in Brazil.

The discussions with the Gulf company, owned by the Emirate of Dubai, come after separate talks with other potential investors, including Chinalco, the Chinese state-owned metals group, although these are not expected to result in a deal.

Anglo needs cash to bring its Brazilian iron ore reserves into production and an injection of capital from an outside investor might help it to fend off Xstrata’s unwelcome merger proposal. Anglo believes that it needs $3.6 billion (£2.1 billion) to develop the Brazilian iron ore. It spent $5.5 billion buying MMX-Minas Rio assets 18 months ago and a sale of part of its stake in MMX is being considered to raise the money needed to begin production.

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Porsche rekindles dispute with VW

The power struggle over Porsche was reignited on Sunday when the chairman of the German sportscar maker accused Volkswagen of attempting to blackmail it into accepting a reworked merger plan. Wolfgang Porsche, Porsche’s chairman and largest shareholder, strongly rejected a Monday deadline that he claimed VW had imposed for Porsche to accept its plan to buy half of Porsche’s sportscar business as a first step towards a full integration of the two companies. VW denied it had issued an ultimatum.

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MENA's first Islamic REIT could list by Sept - CEO

Bahraini asset manager Inovest could list the first Islamic REIT in the MENA region as early as September, the company’s CEO has said.

Inovest is currently raising funds to buy at least $79.5m (BD30m) of property.

Speaking to Arabian Business, Inovest CEO Khalid Abdulla said: “It will be listed soon after we complete raising the funds and allocating the funds. We hope sometime around September.”

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ACI Group denies CEO has been jailed, fled UAE

UAE-based real estate broker ACI Group has denied stories in German business media that the company’s CEO Robin Lohmann has been jailed.

Trade title Financial Intelligence Service last week reported that Lohmann has been under investigation by the Dubai police.

The paper stated that four independent sources had confirmed Lohmann had been taken into custody for one night, had surrendered his passport to the authorities, and was not allowed to leave the country before the debts of ACI Dubai were settled.

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Anonymous Iran Green Brief #12 (June 28) (Re-post)

These are the important happenings that I can positively confirm from Sunday, June 28 in Iran.

1. URGENT: Rumors of Mousavi’s arrest are being spread around the blogosphere and twitter. So far, no reliable source has confirmed this. At the time of the writing of this brief – 9:27 PM ET – he is still free. His facebook account denies the claim: http://www.facebook.com/mousavi?ref=mf

2. Thousands of people gathered in Tehran's Ghoba Mosque today at a rally planned to coincide with the 7 Tir bombing that killed Ayatollah Beheshti and 70 other prominent clerics in 1981. The mosque was filled and the streets and alleys leading up to the mosque were completely crowded by protesters chanting "Where's our vote?" Reports indicate that the number was somewhere between 3 and 10 thousand. Beheshti's son addressed the crowd and said that the current regime was pushing people backwards and was not in touch with current realities of the world. He said that the Sea of Green could stand this and were protesting.

3. Mahdi Karoubi was able to join the protests spoke to protesters. Mousavi wasn't able to make it to the center of the crowd and was forced to deliver his message by calling a cell phone as the receiving phone was put on a loudspeaker. Other prominent members of the reform movement were also present, including the wife and daughter of Rafsanjani. Mousavi urged people to continue fighting for their legitimate demands and announced that he would not stop pursuing their collective goals. Rezaei also issued an open letter to the GC today asking them to investigate the whole election & all protests & complaints.



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Qatar Economy May Get More Support, Al-Thani Says

Qatar, which has said it will buy bank real estate portfolios, may introduce new measures to support its financial markets, central bank Governor Abdullah Bin Saud Al-Thani said.

“I think there is more in our plan to stabilize and to make the financial market and industry more stable and sound,” al-Thani said in an interview today at a central bank governors meeting in Basel, Switzerland. He did not specify which measures would be taken.

Qatar’s government said on May 28 that it would buy real- estate investments worth as much as 15 billion riyals ($4.1 billion) from local banks. Al-Thani said last month that the Persian Gulf state was prepared to extend a bailout of investment-bank funds to other industries after saying in March that it would buy $1.8 billion in investments from seven local banks.

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SECO Sukuk Orders Exceed $1.87 Billion, Banker Says

Saudi Electricity Co., the state- controlled power producer, received more than 7 billion riyals ($1.87 billion) in orders for this year’s largest Islamic bond sale, a banker familiar with the transaction said.

The five-year Islamic bonds, known as sukuk, may be priced to yield 160 basis points over the Saudi interbank rate, said the banker, who declined to be identified before the sale is completed. The utility paid 45 basis points over the Saudi benchmark in 2007 when it raised 5 billion riyals in its first sukuk sale, Bloomberg data show. A basis point is 0.01 percentage point.

Companies in the Arab world’s largest economy are seeking other ways to finance projects as the global crisis prompts banks to tighten lending. Saudi Arabia, which has the largest bourse by market value in the Middle East, started an electronic market for bond trading this month as part of its efforts to broaden sources of financing.

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We aim to double regional volumes in five years

The secret of the success of the Swiss banking industry lies in offering good products and taking a long-term view, according to a senior official at one of the world's oldest financial groups. Lombard Odier, a Swiss institution owned by eight families, has offered banking services since 1796 and claims to have weathered 40 financial crises in the intervening years. Anne-Marie de Weck, Managing Partner and one of the eight family heirs, says the Swiss firm has prospered by offering quality products rather than attracting large numbers of clients. During a visit to Abu Dhabi, she told Emirates Business that the banking sector had something in common that other Swiss speciality, chocolate – both needed a good mix of ingredients.

The Alps, chocolates and banks are what Switzerland is known for. The Alps speak for themselves, but what is the secret behind the success and fame of the chocolate and banks?

We will start with chocolate. Making chocolate is a question of mixing different things that work well together. It is a success when you have the right ingredients, prepare them well and present or serve the result in an appealing and impressive way.



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Submarine fraudster gets five-year term, goes under the radar

The former head of Dubai World's submarine unit was sentenced to five years in jail and fined Dh14 million for embezzlement in his absence yesterday.

HJP, from France, is on the run outside the UAE. He was convicted at Dubai Criminal Court of exploiting his position as manager of the Exomos division to embezzle Dh14m.

The court heard that HJP had told a Dubai World official that his company, Seahorse Submarines, could manufacture undersea craft for the group.

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Algosaibi a test for Gulf unity - UAE

The way Gulf states manage the fallout from the Algosaibi group, which owes 34.6 billion Saudi riyals (Dh33.71 billion) to banks, is a test for the cooperation needed to build a unified currency, the UAE Central Bank governor said.

"If we have a common market, we should know how to deal with such cases," Sultan Bin Nasser Al Suwaidi said in an interview in Basel, Switzerland, on Sunday. "We should meet as regulators and we should discuss the issue and discuss a solution. All these things have not happened."

The UAE on May 20 became the second country in the six-member Gulf Cooperation Council to pull out of a planned monetary union, after Oman withdrew two years ago. The exit of the UAE, the second largest Arab economy, was deemed a major blow to the project and came after Riyadh, the Saudi Arabian capital, was chosen as the spot for a future Gulf central bank.

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Shuaa soars on dispute resolution

Shares of Shuaa Capital, the UAE’s biggest investment bank rose by the most permitted in a single session following the resolution of its dispute with Dubai Banking Group on a Dh1.5 billion (US$408 million) bond conversion.

Shuaa shares advanced 14.97 per cent to Dh1.69 during early trade after rising by a similar measure on Thursday.

“There is a lot of volatility in the market but Shuaa is at the positive end. Resolution of its dispute with Dubai Banking Group has certainly helped in restoring investor confidence,” Aymen el Saheb, the head of operations at Drahem Financial Brokerage in Dubai said.

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ADCB stumbles on Saudi worries

Abu Dhabi Commercial Bank shares fell Sunday taking the weekly loss to more than 18 per cent as investors awaited more information on the institution’s exposure to Saudi Arabia’s Saad and Gosaibi groups. Banks across the region have been forced to disclose loan exposure to the two familiy conglomerates, which are in the throes of debt restructuring.

“The fact that investors need to have more information is one of the key issues on the table, the main reason why the stock has been losing so many points so fast,” said Ayman el Saheb, the director of operations at Darahem Financial Brokerage. [CK] “We still don’t know what the exact numbers are to gauge exposure to the Saad-Gosaibi groups.”

The turmoil at the Al Gosaibi and Saad groups, two of the region’s largest family-run conglomerates, has spread throughout the Gulf as banks have moved to limit exposure to both companies after their accounts were frozen in Saudi Arabia last month. Local lenders including Mashreqbank, National Bank of Abu Dhabi and First Gulf Bank have admitted lending exposure without detailing value of their loans.

Guarantee on bond sales to stimulate lending

A planned federal law that will guarantee the bond sales of local banks will trigger a new wave of lending and allow financial institutions to tap cheaper funds, senior bankers say.

The Federal Government is close to introducing legislation that will guarantee bond sales, aimed at shoring up investor confidence in new issuances as regional capital markets struggle to recover from the global recession.

“In my view, formalising a government guarantee on deposits and bank borrowings will certainly act as a catalyst for foreign investors to lend to UAE borrowers,” said Mohammad Wajid, the global head of the financial institutions division at Emirates NBD. “The true recovery will start only once banks themselves feel comfortable to lend actively again.”

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Five found guilty of embezzling Dh423m from finance company

Two former chairmen and three board members of an Islamic finance company were sentenced to between one and three years in jail yesterday for embezzling Dh423 million (US$120m).

Ali Hamel al Qubaisi, a former chairman, was sentenced to three years by the Court of First Instance after he was found to have transferred money from the company’s accounts to another one in which he was the majority shareholder.

The second chairman, Abdullah al Qubaisi, was sentenced to two years while the three board members, Alwaleed al Mubarak, Eissa al Shamlan and Ghaith al Qubaisi, each received a one-year sentence.

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QE2 refurbishment stalled in Dubai

The RMS Queen Elizabeth 2 during a port visit ...Image via Wikipedia

The QE2 cruise ship seemed to have a bright and brash future when it hove into port in Dubai last year after 40 years as Britain's favourite cruise ship.

It was to be the emirate's second so-called "seven-star hotel" - the funnel sliced off in favour of a glass penthouse; the interior reworked into spas, restaurants and a three-storey ballroom.

But the refurbishment has not started and the ship is crewed not by builders, plumbers and fitters but by engineers and maintenance men with a mission to keep the woodwork polished and the fabric from decaying.

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Sunday, 28 June 2009

Dubai and Angola explore opportunities to promote diamond trade

Dubai Multi Commodities Centre (DMCC) announced today that it has begun exploring opportunities to strengthen ties with Angola in the area of diamond trade.

Dubai's delegation comprising Ahmed Bin Sulayem, Executive Chairman of DMCC, Peter Meeus, Chairman of Dubai Diamond Exchange and Paul Motmans, an expert on the Angolan economy, met with senior government officials of Angola at a high-profile dinner meeting in Luanda, Angloa, earlier this month.

Dubai and Angola are in the preliminary stage of outlining areas for cooperation to increase rough diamond trade volumes, in addition to other initiatives that can benefit the entire value chain of the diamond industry.

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Omar Quqa resigns, “Global needed me the most in this current critical stage”

Omar Quqa’s resignation on Sunday, June 28, 2009 from Global Investment House after 10 years of service.

Dear Globals,

After 11 years from establishing and working in Global, today I have submitted my resignation.

While I was not in agreement with the need for the recent change in the organizational structure announced in March, I have accepted to be the Advisor considering the critical time Global is passing through and based on the promise that I will be involved in strategic decisions and in the many committees that will be formed. This, however, has not happened.

I have tried my best numerously to be active and cooperative in providing advice and guidance to the management and members of the different committees, despite continuous efforts to exclude me, and all of that because of my belief that Global needed me the most in this current critical stage.

Now, and given the imminent signing of the rescheduling agreement with lenders, I have decided to submit my resignation, as attached. I’m sorry for not writing it in English as I felt writing it in Arabic would give me better flexibility in explaining my feelings.

Global is a great place and will continue to be the leader in the industry; you have raised the bar for this industry and are a source of pride for the whole region.

During the last 11 years at Global, I have learned a lot with and from all my colleagues, and especially Mrs. Maha Who I have worked with for the last 28 years.

I wish all of you all the best,



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ADBIC, Midal Cables sign $100 mln JV

Abu Dhabi Basic Industries Corp (ADBIC) said on Sunday it signed a joint venture agreement with Bahrain's Midal Cables under which the companies will set up a $100 million aluminum plant.

The agreement comes as ADBIC expands it downstream business and focuses on building clusters of industries to produce steel, aluminum, and petrochemicals.

Construction on the plant, which will produce 150,000 tonnes of aluminum products annually, will begin in the first quarter of 2010 at Abu Dhabi's Khalifa Port and Industrial Zone at Taweelah, ADBIC said in an emailed statement.

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Bad weather forces Iraq to delay oil tenders

Iraq has postponed the first day of highly anticipated tenders for eight major oil and gas fields due to a thick sandstorm that engulfed Baghdad on Sunday, the Oil Ministry said.

Ministry spokesman Asim Jihad said the ministry would begin announcing the winners of contracts to develop the fields on June 30 instead of June 29 because many executives had been unable to fly into Baghdad owing to the weather.

Jihad said the contracts might be awarded on one day instead of over two days. Some of the world's biggest oil firms, like Exxon Mobil, Total and Royal Dutch Shell are competing for deals to develop the six oil fields and two gas fields in the war-weary country's first major tender since 2003.

Iraq has the world's third largest proven oil reserves, estimated at 115 billion barrels.END



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Emaar merger risks job losses, project cuts

Emaar Properties’ merger with three state-owned property firms could spark further job cuts and project cancelations in Dubai’s beleaguered real estate market, as well as a wave of consolation among developers, analysts said on Sunday.

Emaar, the Middle East’s largest developer, announced over the weekend it is in advanced talks to merge with Dubai Properties, Sama Dubai and Tatweer - units of state-owned Dubai Holding - as the companies struggle amid a steep market downturn.

The downturn, set off by the global financial crisis, has seen property prices tumble more than 50 percent, billions of dollars worth of projects cancelled and thousands of people lose their jobs.

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Global's GCC Weekly Market Report – June 25, 2009 (PDF)

Global's Egypt Weekly Market Report - June 28, 2009 (PDF)

Saudi banks' lending falls amid solvency fears

Saudi banks' lending to the private sector fell for a third straight month in May, official data showed, amid growing concerns over the solvency of some family-owned firms and the local lenders' exposure to bad debts.

Bank claims on the private sector, a key indicator of lenders' confidence, stood at SR724.87 billion (Dh710bn) in May, their lowest level since August, showed the data published on the Saudi Arabian Monetary Agency's (Sama) website. Compared to April, bank claims on the private sector made in May their sharpest month-on-month drop since January.

At 7.6 per cent, their annual growth was the lowest in at least one year.

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Hoteliers say further price cuts could be a dangerous strategy

Hotel room rates in Dubai have come under severe pressure with the decline in business travel and the continuous new supply coming onto the market, which has caused operators to slash rates, industry experts said.

The latest available data from STR Global and Deloitte show that occupancy levels in hotels in the Middle East have declined by 9.6 per cent from April 2008 to April 2009, while revenue per available room (RevPAR), an industry benchmark, has declined by 14.9 per cent.

Sami Al Ansari, Chief Executive Officer of Ishraq Gulf Real Estate (Holding), the company behind Holiday Inn Express in the region, told Emirates Business: "Year to date it's not too bad, the market is averaging close to 70 per cent across Dubai, which is positive in itself. There is huge pressure on room rents, which is driving rates to very dangerous levels. In the beginning of June we saw rates come down even further and unfortunately we have not seen the bottom yet, as it is just the beginning of summer."

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Samba Financial leads decline in Tadawul

Saudi Arabian shares fell in the week's first day of trading, led by Samba Financial Group, a bank managed and in part owned by members of the Al Gosaibi family, whose Bahraini bank defaulted.

The Tadawul All Share Index fell 0.1 per cent to 5,601.19 at close in Riyadh, losing some of the gains of the previous day. The gauge gained 16.6 per cent this year after losing more than half its value in 2008 as oil prices dropped.

Samba fell the most since January 20, retreating five per cent to 42.1 riyals. Ahmad Hamad Al Gosaibi & Brothers Co, the Saudi family holding company, owes 34.6 billion Saudi riyals ($9.2 billion) to more than 100 banks, two people familiar with the situation told Bloomberg on June 25.

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The consolidation of Dubai Inc

Dubai Holding {{lang|ar|دبي القابضة}}Image via Wikipedia

A series of consolidations and debt restructurings in Dubai are bringing needed clarity to the emirate’s response to the financial crisis as it works to reorganise government-controlled companies.

Emaar, the Middle East’s largest developer, said on Friday it was in talks to acquire the property interests of Dubai Holding, bringing three companies – Sama Dubai, Tatweer and Dubai Properties – under its umbrella.

Also last week, Dubai World, the major property and ports conglomerate, said it was consolidating the management and property operations of Leisurecorp, Dubai Maritime City and the Dubai Multi Commodities Centre, all of which it owns. The property divisions of these companies will now be run by Nakheel, another property arm of Dubai World.

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