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Saturday, 31 October 2009

GCC Monthly Markets Report 31 10 2009 (PDF)

(Qatar) Full foreign ownership in 3 sectors

Qatar has fully thrown open three sectors to foreign investors. An amendment to the investment law for non-Qataris by the Council of Ministers on Wednesday allows foreign investors to hold 100 percent stake in consultative and technical work services, the information and technology sector, and distribution services.

The amendment also empowers the respective ministers to relax the law on foreign investment in nine key sectors including agriculture, industry, health, education, tourism and natural resources’ development. The landmark decision is expected to add muscle to the country’s booming economy.

However, the amendment prohibits non-Qataris from investing in the banking and insurance sectors. But it authorizes the Council of Ministers to look into in some exceptional cases. The foreign investment will be allowed in compliance with the country’s National Development Strategy.

A real appetite for the mystery of DP World

Despite laudable efforts at transparency in its investor and public relations, there is still a fog of uncertainty surrounding DP World. This is not so much in terms of its own affairs – the ports and shipping business quoted on Nasdaq Dubai has arguably made more progress towards achieving international standards of corporate governance than any other UAE corporate.

It is the relationship with its parent, Dubai World, that confuses and perplexes. Since flotation in late 2007, just before world markets began to teeter towards the credit-crunch cliff, the parent company has continued to regard DP World as more or less its own private company, pulling in dividends but not really addressing the central concern for other shareholders: the destruction in investor value that has been its hallmark as a quoted company.

Floated at $1.30, the shares have never since traded at that level. After last week’s trading statement, they slipped back again to close at $0.50. Worth more than $20 billion on its IPO, DP World is now worth just over $8 billion (Dh29bn).

Asia looks enticing to Gulf investors

The Kuwait China Investment Company (KCIC) is one of a number of firms in the Gulf seeking to build commercial and financial bonds between the Middle East and Asia, preparing to profit from a rise in consumer spending there as global economies recover.

“We’re very much a domestic consumption story philosophy,” said Ahmad al Hamad, KCIC’s managing director. “We look at Asia for when Asia becomes a consumer of its own goods and services, and not Asia for when it has an export-driven economy. So we’ve decided to focus on sectors that will drive that story forward.”

KCIC joins a range of investors in the UAE and across the Gulf, including sovereign wealth funds and a range of private firms, that are targeting assets expected to play a pivotal role in the development of China and India into global economic powerhouses.

CDS wrap: Is decoupling back?

Markit’s Gavan Nolan wrote this CDS report



Decoupling theory was thought to have suffered a fatal blow over the past 18 months. Its advocates were dismayed to find that emerging economies did not hold firm while developed countries collapsed in a financial-induced mess. And the subsequent global recession was not even synchronous - export-driven economies such as South Korea were among the first to enter the recession. Global trade suffered the worst slump since the 1930s, according to recent work by Reinhart and Rogoff (2009), and exporting nations were at the sharp end.

But the idea of developing countries outpacing industrialised economies has made something of a comeback in recent months. Only today UK-based advertising agency WPP posited the “LUV-shaped” global economic recovery: an L-shaped recovery in Western Europe; a U-shaped turnaround in North America; and a V-shaped recovery in the BRICs and the next 11 major emerging economies. Jargon aside, this states that Western Europe will experience a protracted period of flat-to-low growth, the US will recover but not immediately and the BRICs and other select developing countries are in the midst of a strong, rapid recovery.

Is there evidence to support this view? The HSBC Emerging Markets Index published earlier this month provides robust support. The index, compiled by Markit, is based on 18 manufacturing and service sector PMI surveys across 13 countries. It shows that output rose in the third-quarter by the largest amount since Q2 2008. Leading indicators point towards further output growth in the coming months as companies rebuild their inventories.

The IMF is also bullish about emerging market prospects. Its Regional Economic Outlook for Asia and the Pacific, published yesterday, forecasts that growth in Asia will accelerate to 5.75% in 2010 from 2.75% in 2009, both higher than previous projections. The agency highlighted the emphatic policy response from the region’s major economies, made possible by prudent fiscal policies in the run up to the global recession. Monetary and fiscal stimuli have helped support domestic demand without placing government finances at risk (see convergence of BRIC CDS spreads to G7 and Western Europe in chart above).

But the real driver of the swift recovery wasn’t internal. Global trade, the very factor that caused the EM recession, has staged a strong recovery. In fact, it started to rise back in February, way before other measures of economic activity were stabilising. This “return to normalcy”, as the IMF puts it, has meant that emerging market countries have rebounded just as quickly as they slumped in 2008. Rather than decoupling, the fortunes of developing countries appear to be as bound to the “old” industrialised world as ever.

That said, investors bullish on EM would have welcomed the stronger than expected US third-quarter GDP figures released yesterday. The initial reaction of global credit markets was as positive as could be expected. But the rally proved ephemeral, and spreads and stocks have sold off today after another US economic release suggested that the recovery is fragile. Personal consumption expenditure in September fell unexpectedly after rising for four consecutive months. The expiration of the “cash for clunkers” car rebate programme appears to have hit spending. Incomes also fell slightly, indicating that consumer spending will remain weak.

The data highlighted the fears of many: the world’s largest economies are on life-support provided by the government. It is the great unknown whether the private sector can replace the stimulating effects of public spending and medium-term sovereign spread direction will be determined by the answer.

Hollywood gets helping hand from Qatar as it struggles with box office slump

The Qatari media group, Alnoor Holdings, said a new fund would finance up to 15 films over the next five years and the first project would be announced within days.

It will be a welcome relief in California where film productions have been leaking away abroad or to other US states offering financial incentives like tax credits and rebates.

The Qatari media group, Alnoor Holdings, said a new fund would finance up to 15 films over the next five years and the first project would be announced within days.
It will be a welcome relief in California where film productions have been leaking away abroad or to other US states offering financial incentives like tax credits and rebates.

Also see original source

Friday, 30 October 2009

The CME’s sour

Just two days after Saudi Aramco decided to change the way it prices its oil - by abandoning the Platts WTI benchmark in favour of Argus Petroleum’s Sour Crude Index - the CME, owner of the Nymex exchange, responded rather decisively.

According to a press release on Friday, the CME will be launching its own Argus Sour Crude Index swap futures to fill any potential hedging hole left in the market (our emphasis):

CME Group, the world’s largest and most diverse derivatives marketplace, today announced the launch of trading and clearing services for cash-settled trade-month swap futures on the Argus Sour Crude Index (ASCI) as published by Argus Media. Under a licensing agreement with Argus Media, CME Group can develop futures, options and over-the-counter (OTC) offerings on a broad range of Argus products.

Trading for the ASCI product is scheduled to begin November 23 on the New York trading floor. Clearing services will be available through CME ClearPort, a set of flexible clearing services open to OTC market participants to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes. The ASCI tracks the price in the physical market of a basket of US Gulf Coast crude oils, including Mars, Poseidon and Southern Green Canyon, which are priced at a differential to the NYMEX Light Sweet Crude Oil (WTI), the world’s most liquid, leading crude oil benchmark.

The ASCI OTC contract will provide producers, commercials and others an essential tool for pricing spreads on these grades with NYMEX WTI. In addition, CME Group plans to launch a new physically delivered US Gulf Coast Sour Crude Oil futures contract, which will be listed on CME Globex and CME ClearPort by the end of January 2010. The sour crude futures contract has main delivery grades that closely mirror the ASCI, enabling an efficient tool for hedging opportunities and to meet the evolving needs of the energy industry.

The contracts will be listed by and subject to the rules and regulations of NYMEX. “We are pleased to offer OTC futures contracts on the ASCI, which complement our WTI futures,” said CME Group Executive Chairman Terry Duffy. “This week, Saudi Arabia announced that they will begin using the ASCI to price their substantial oil exports. This further strengthens the benchmark status of our WTI contract as ASCI components are priced as differentials to the WTI settlement price.”

“The ASCI OTC futures contract, in concert with the WTI contract, will enable our customers to hedge price exposure to the global crude market with greater precision,” said CME Group Chief Executive Officer Craig Donohue. “Additionally, Saudi Arabia’s adoption of ASCI could spur demand for our new sour crude futures contract, which will provide an additional pivot point for price determination and risk management in the world oil market.” The vendor code for the ASCI contract is 29. The first listed month will be the January 2010 contract month. The contract will be listed for 36 consecutive contract months.

The CME’s quick move to adjust to the sour switch, which we note has been facilitated by a licensing agreement with Argus, should help the exchange retain Nymex’s standing as the provider of the most liquid crude contract in the US.

However, even though the new sour product will be priced as a differential to WTI at this stage, that doesn’t mean that further down the line - if and when the sour index takes off - the index and all its derivatives won’t end up being priced completely off their own right.END

Dubai Properties Chairman Arrested on Suspicion of Embezzlement

Hashim Al Dabal, chairman of Dubai Properties LLC has been arrested on suspicion of embezzlement at the company, the emirate’s attorney general said.

“Mr. Al Dabal is accused of abusing his position and earning millions in illegal profit,” Attorney General Essam Essa al-Humaidan said in a phone interview today. “We are questioning him almost daily and Mr. Al Dabal indicated he is ready to answer questions without having a lawyer present.”

Last year, Dubai began an investigation into corruption in real estate companies, which benefited from surging demand after foreigners were allowed to buy property for the first time. Several officials were arrested, including Zack Shahin, former chief executive officer of the emirates’ second-biggest property developer, Deyaar Development PJSC, and Adel al-Shirawi, former CEO of mortgage lender Tamweel PJSC.

Dubai returns to fixed income sphere

Dubai returns to the fixed-income sphere for the first time in more than a year after raising about $2 billion from dirham and dollar-denominated Islamic bonds.

Confidence in the emirate had run aground earlier this year as investors bet on Dubai’s state-linked entities not being able refinance debt. So far, this year it has met all its obligations and with the fresh issue booking about $6.5 billion from regional and international investors, Dubai’s doomsday scenario appears to be vanishing.

With much of the United Arab Emirates’ oil coming from the largest of the emirates Abu Dhabi, investors have flocked to the capital this year as appetite for good emerging market debt revives. The spread between Abui Dhabi and Dubai widened at its peak to over 500 basis points in February, but Dubai government efforts to restore confidence — kickstarted by the UAE central bank buying $10 billion of its bonds — has helped spreads narrow to about 200 basis points.

Dubai still has a long way go. The next test will be property developer Nakheel resolving its $3.5 billion Islamic bond maturing on Dec. 14 and then a raft of debts in 2010…..but as Harold Wilson once said, ”A week’s long time in politics.”


Aabar to continue acquisitions

Aabar plans further acquisitions, notably in Latin America, after booking sharply higher third-quarter profits powered by its investment in the car maker Daimler.

“I can confirm that potential future transactions include new and exciting opportunities around the world and in areas not previously explored by Aabar,” said Mohammed al Husseiny, the chief executive of the investment firm controlled by the Abu Dhabi Government. His statement mentioned Latin America as a location of interest.

Earlier this month, the company announced it would pay US$328 million (Dh1.2 billion) to acquire a stake in Banco Santander (Brasil), a unit of Spain’s largest bank. That was the latest addition to a diverse portfolio of investments that includes Daimler, the maker of Mercedes-Benz, and Virgin Galactic, the space travel venture.

IPIC’s links to Europe grow stronger with agreement

Abu Dhabi’s International Petroleum Investment Company (IPIC) agreed to share ownership of its Nova Chemicals unit with the Austrian petroleum company OMV, deepening its long-standing relationship with the European firm in which it holds a 19.6 per cent stake.

Under an agreement struck about a month ago, Borealis, an IPIC-OMV chemicals joint venture based in Vienna, would acquire 24.9 per cent of Nova from IPIC. The deal received regulatory clearance from the European Commission last week.

“IPIC is currently reviewing synergies between us and its other portfolio companies with the objective of creating a new global polyolefins leader,” Nova said earlier this month. “In this context, IPIC and OMV have decided to share control of us similar to their successful joint ownership and control arrangements for Borealis.”

Mickey’s big hand is pointing right out the door

I was probably among the first 500 economic commentators to forecast the decline of the luxury watch industry. As the world went into financial meltdown last year it was clear to me that expensive watches, which perform a perfectly useless function nowadays, were superfluous.

Within days, they would all emulate Salvador Dali’s own perspective on time.

I am sure that the only reason other commentators failed to notice this is because they were focused on the downfall of firms such as Lehman Brothers and General Motors, although to my mind to see only these was to miss the big picture.

Road to recovery fraught with peril

Len Hunt, the group director of Al-Futtaim’s automotive division and a 30-year industry veteran, summed up the predicament facing the global economy perfectly this week with a driving analogy.

We have climbed up out of the recession, Mr Hunt said, and are cresting what we hope is the last rise before reaching recovery. But what really lies ahead, no one knows.

The worst recession in 70 years is officially over. The world’s largest economy resumed its expansion in the third quarter, growing 3.5 per cent from the previous three months. The rest of the world, including the Gulf, appears to be in a stubbornly slow, but steady, recovery.

Gulf stock markets brace for correction

Stock markets fell the most in two months on Thursday as a global sell-off was made worse by a host of quarterly profit declines across the key banking and construction sectors.

The gloom lifted late in the day when the US reported surprisingly strong 3.5 per cent growth in the third quarter, the first positive quarter in more than a year. But many economists still doubted the resilience of recent gains in global asset prices as stimulus spending subsides.

“What bothers me is that global markets are quite heavily overextended, and if there is a correction the spillover could affect this region,” said Fahd Iqbal, the vice president of research at EFG-Hermes.

Dubai Technosphere takes a page from Disney's playbook



The Technosphere is an eco-friendly building set to be built in Dubai. Shaped like a sphere, it's a solar powered design with minimal waste, with the whole thing meant to represent the state of the Earth's ecosystem. Oh, and it also looks just like Spaceship Earth at Disney's Epcot Center.

But hey, wait, isn't Dubai totally screwed, money-wise? I thought they stopped putting up insane buildings for no real reason because they were out of money? Maybe this one is what'll turn it all around for them.

Saudi move is bid to realign oil market: John Kemp

Saudi Aramco's decision to abandon a light sweet oil benchmark closely linked to NYMEX futures as the basis for crude sales to U.S. customers reflects growing frustration with its performance over the last two years.

While it will not imperil NYMEX's status as the main forum for oil futures trading, it will increase pressure on the exchange to consider adjustments to its contract. In time NYMEX may have to allow a wider range of crudes to be delivered and add a delivery location on the U.S. Gulf Coast [ID:nLN445640].

Qatar Holding Said to Consider Joining GE’s Areva Bid

Qatar may join General Electric Co. and CVC Capital Partners Ltd. in their bid to buy Areva SA’s electricity transmission and distribution unit, two people familiar with the matter said.

Qatar Holding LLC, an investment unit of the Persian Gulf country’s sovereign wealth fund, hired New York-based investment bank Evercore Partners Inc. to advise on acquiring a stake in Areva’s unit should the GE-led bid succeed, said the people, who declined to be named because the talks are private. Officials at Doha-based Qatar Holding declined to comment.

Areva, the world’s largest maker of nuclear reactors, received three indicative bids worth less than 4 billion euros ($5.9 billion) for the unit, people close to the sale said last month.

Downsizing Dubai: Will the Middle East's golden child ever be the same again?



The UAE is waking up … but it has one hell of a hangover, and it’s going to take more than a couple of fizzy tablets to make it all better. So what sort of market is emerging? Well, the chances are it’s going to be good news for shed builders

It’s only 7pm on Tuesday night but it is already buzzing in Neo, the swanky cocktail bar at the top of The Address, a 63-storey hotel in Dubai. The view from the floor-to-ceiling window is stunning. We are immediately opposite the 818m Burj Dubai, the world’s tallest tower, which is due to open with one almighty party on 2 December, the UAE’s National Day. On the lake in front of it, the world’s largest fountain performs a mesmerising dance on the half hour. Beyond are the glittering lights of the city … including those of tower cranes, because like the nightlife, construction is moving again. The roads are clogged with traffic and the armies of labourers are back on the city’s sites.

In fact, six months after the global recession brought Dubai to a screeching halt, it does not feel like there is a recession here at all. Down the road, Abu Dhabi is busy again, too. But despite the evidence of recovery, nobody thinks the UAE is about to turn back into the rocket economy that exploded so spectacularly at the end of last year, and many British firms here are still struggling. So the question is, exactly what will the new UAE market look like?

Dubai bond sale a move in right direction

Dubai’s successful bond sale this week was hailed as an important step towards bringing the debt-saddled emirate back on track, but bankers and analysts warned it still needed to raise more money to meet looming repayments.

The Gulf’s leading business hub has been at the epicentre of a regional downturn, weighed down by a collapse in the real estate market and an estimated $80bn mountain of debt.

Earlier this year Dubai’s creditors were concerned the emirate could default, but thanks in large part to succour from the federal government of the United Arab Emirates – of which Dubai is one of seven autonomous statelets – the emirate is now showing signs of recovering from its malaise.

Thursday, 29 October 2009

EurasiaNet Eurasia Insight - Kazakhstan: A Showpiece of Energy Wealth Rises in the Western Desert

EurasiaNet Eurasia Insight - Kazakhstan: A Showpiece of Energy Wealth Rises in the Western Desert

UPDATE: UAE Aabar 3Q Profit Soars On Daimler Investment Gains

Aabar Investments PJSC (AABAR.AD), the largest shareholder in Daimler AG (DAI.XE), Thursday said its third-quarter profit soared as the value of its investment in the German automaker increased.

Profit for the period surged to 1.18 billion U.A.E. dirhams ($323.9 million), or AED0.38 a share, from AED19.9 million a year earlier, the company said in a statement on the Abu Dhabi exchange's Web site.

The Abu Dhabi-based investment firm reported AED6.98 billion in gains from Daimler shares, which outweighed a widened loss in derivatives linked to the carmaker.

Aabar, which is majority-owned by the Abu Dhabi government's International Petroleum Investment Co., in March became Daimler's biggest shareholder when it paid 1.95 billion euros ($2.80 billion) for a 9.1% stake in the world's second-biggest luxury-car maker.

Between March and September Daimler shares gained almost 50%. They closed down 5.3% at EUR33.22 Wednesday.

In its statement Thursday, Aabar said losses from derivative financial instruments amounted to AED3.51 billion during the third quarter, compared with AED2.25 billion during the second quarter.

Flush with cash from years of soaring oil prices, Aabar, IPIC and other Abu Dhabi sovereign investors are targeting foreign assets to extend their influence outside the Middle East.

Aabar said a "series of symbolic investments" during the third quarter "have reinforced Aabar's position in the market as a major investor".

The company said it will "continue to evaluate opportunities and projects in its pipeline through to the end of 2009".

Aabar shares last traded 1.5% lower at AED2.62 in a broadly negative market.

Former DIFC chief says Dubai needs more support

The former CEO of Dubai International Finance Centre (DIFC) Authority has said he believes more state intervention is required to ensure Dubai’s recovery from the global financial crisis.

Nasser Alshaali, now CEO of UAE-based boat and yacht maker Gulf Craft, said the fallout from the downturn caught Dubai by surprise and that further policy changes were needed to bolster the emirate’s path out of the crisis.

“Dubai was definitely hit very, very badly. You talk to the businessmen and they’re all shocked. In the fall of 2008 and the spring of 2009, there was an air of desperation. We thought we were immune,” he told Arabian Business in an interview.

Gulf needs time to warm to long-term bond issues-Mubadala

The Gulf Arab region needs a proven secondary fixed income trading market and strong local bids before issuers warm to longer term maturities, a senior executive at Abu Dhabi-owned investment fund Mubadala says.

The region, cushioned by its oil wealth, had traditionally been averse to tapping international markets for debt. But that has changed in the past decade with Dubai taking a lead by using debt to finance its rise to a regional hub.

'This is a developing economy and before you can develop longer term issuances, you need to spend time with investors,' Matthew Hurn, head of group treasury at Mubadala, said on Wednesday.

DIC May Raise $550 Million Loan to Refinance Debt, Bankers Say

Dubai International Capital LLC, a private equity investor controlled by the emirate’s ruler, may raise a $550 million loan to repay existing debt, two bankers familiar with the transaction said.

The two-year loan may pay 400 basis points above the London interbank offered rate, said the bankers who didn’t want to be identified before the deal is complete.

The loan is in the general syndication stage after the company received commitments from banks with which it has relationships, according to one of the bankers. The lenders have an option to extend the loan for another year, the same banker said.

Mashreqbank PSC, Noor Islamic Bank, Standard Chartered Plc and Royal Bank of Scotland Group Plc are arranging the debt.

Anand Krishnan, Dubai International’s chief executive officer, wasn’t immediately available to comment when contacted by Bloomberg News today.END

U.A.E. Shares Fall Most Since August, Lead Drop in Arab Stocks

United Arab Emirates shares tumbled the most since August, leading Arab markets lower, after Dubai Financial Market PJSC and Arabtec Holding PJSC were among companies reporting a decline quarterly profit.

Dubai Financial Market, the only Gulf Arab stock market to sell shares to the public, and Arabtec, the biggest construction company in the U.A.E., slumped the most since Aug. 17. Arkan Building Materials Co. fell to a two-year low after the construction-supplies maker reported earnings. Sorouh Real Estate PJSC, Abu Dhabi’s second-biggest developer, dropped the most in more than two months as quarterly profit slid.

“Markets were bid higher in anticipation of a good third- quarter, and now that these numbers have materialized investors are taking profit,” said Mark Friedenthal, a fund manager at Abu Dhabi Commercial Bank. “Global sentiment is now deteriorating.” Dubai’s index has gained 34 percent this year.

GCC Weekly Markets Report - 29/10/2009 (PDF)

Saudi Stock Market Weekly Report - 28-October-2009


Dubai debt regains favour as new bond issue sells briskly

Dubai received a warm welcome from international investors on Wednesday as the emirate prepared to fill orders of about US$2 billion (Dh7.34bn) for its new Islamic bond.

The issue was more than three times oversubscribed, although bankers said the five-year bonds were likely to yield about 6.6 per cent and 5.6 per cent depending on the currency. By comparison, the five-year Abu Dhabi bond due in 2014 yields 3.85 per cent.

“It is only logical that investors expect a higher return for taking on Dubai risk,” said Chawan Bhogaita, who heads credit research at the National Bank of Abu Dhabi.

Dollar recovery pushes up rates

The window for Dubai to climb back into the global credit markets is open, but it is may not be open very wide for very long.

Dubai managed to sell slightly more than US$1.9 billion (Dh6.97bn) in Islamic bonds, or sukuk, yesterday, drawing a surplus of orders by offering investors a risk premium to help it re-enter the bond market for the first time in more than a year.

The sukuk are part of a new, $6.5bn bond programme designed to help Dubai refinance an estimated $85bn in debt owed by the Government and the companies it controls. The new bonds come on top of $10bn Dubai has already borrowed from the Central Bank and another $10bn it hopes to borrow before the end of the year.

Banks hold key to better corporate disclosure

The Gulf has a long way to go in corporate disclosure and unlike developed economies in the West, the key driver here may well be banks rather than the regulators.

The message from speakers at this week's Reuters Middle East Investment Summit was clear. There has been improvement, there is a long way to go, more transparency is essential and the banks will demand it before they risk any more cash on the region's businesses.

Banks across the region, as well as their international counterparts, have been badly burned by the wave of corporate defaults that came in the wake of the economic downturn, and future lending is likely to depend on greater transparency from lenders.

Saudi monthly credit growth comes to halt in Sep

Credit growth in Saudi Arabia almost came to a halt in September compared to August as banks in the biggest Arab economy dealing with a debt crisis of family firms remained cautious, official data showed on Wednesday.

Bank credits were almost flat, reaching 721.6 billion Saudi riyals ($192.4 billion) in September after 721.4 billion riyals in August, the Saudi Arabian Monetary Agency (SAMA) said.

In August credit growth was up almost 2 percent compared to July, the data on SAMA's website showed.

GFH eyes 40 percent income from investment management

Bahrain-based Islamic lender Gulf Finance House GFHB.BH (GFH) wants between 30 to 40 percent of its revenues to come from its investment management division, the chief executive of the unit said.

The lender is trying to diversify its revenue stream by expanding its asset management and entering investment banking advisory services through a joint venture under discussion with Australia's Macquarie Group (MQG.AX: Quote, Profile, Research, Stock Buzz).

"Transactional income is great, but it's lumpy and it depends on activities and deals in that particular financial year, so what we want to do is build an annuity base so we got a more certain income structure," Ted Pretty told the Reuters Middle East Investment Summit in Manama.

Saudis drop WTI oil contract

Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange.

The decision by the world’s biggest oil exporter could encourage other producers to abandon the benchmark and threatens the dominance of the world’s most heavily traded oil futures contract. It is the main contract traded on Nymex.

The move reveals the growing discontent of Riyadh and its US refinery customers with WTI after the price of the price of the benchmark became separatedfrom the global oil market this year.

Gulf companies show signs of recovery

After a difficult year, Gulf companies are beginning to show signs of recovering from the downturn, with third-quarter earnings figures making largely heartening reading.

The results for 385 companies that have reported so far indicate an overall 25 per cent year-on-year decline in profits, according to figures compiled by EFG-Hermes. This is a marked improvement from the 48 per cent slump in the second quarter.

Quarter on quarter, earnings rose 7 per cent between July and September. While this is less than the 14.4 per cent jump in the second quarter, it still indicates an improving trend.

Wednesday, 28 October 2009

UAE: No Default Risk! (Re-post)

UAE used to be one of the most promising markets in MENA if not in the world. With the vast increase in projects and the high dependence on leverage, the affect of the financial crises hurt them the most, both in their stock market and their property market. The sukuk market also had is share of downfall, where some of the sukuks issued by big name like Nakheel and Emaar Properties stated yielding around 40% as the risk of default was apparent.

Nevertheless, worst might be over for the UAE and defaulting seemed to be out of the question. The graphs below show a huge slump in the CDS spreads from their peak in mid january due to the support from the government to the local entities.

Dubai 5 year CDS spreads












Abu Dhabi 5 year CDS spreads

Saudi Aramco’s WTI snub

Remember those problems WTI crude had earlier this year with Cushing delivery? Remember how they cast a doubt on the grade’s position as a global oil benchmark?

Well it seems Saudi Aramco, the state oil company of the world’s top oil exporting nation, may have been more worried about the issue at the time than it originally made out.

In any case, on Wednesday, the state producer made abundantly clear what it thought of the benchmark. Here’s the press release from energy OTC pricing agency Argus (our emphasis):

Dubai Prices $1.25B 5-Yr Dlr Bonds, AED2.5B 5-Yr Sukuks At Par

The government of Dubai on Wednesday sold $1.25 in dollar-denominated bonds and 2.5 billion dirhams worth of Islamic bonds, or sukuks, at par in a two-tranche, five-year debt offer, according to a fund manager's term sheet.

The dollar tranche carries a coupon of 6.396% and yields 406 basis points over comparable Treasurys. The dirham-denominated portion of the sukuk has a coupon of 370 basis points over the three-month Emirate interbank offered rate.

The total value of the offer, around $1.93 billion, is lower than the market had previously anticipated.

With its economy hit by a sharp downturn in real estate, Dubai needs to raise new funds to help pay existing debt, which combined with the borrowings of its corporate proxies is said to exceed $80 billion. The country becomes the latest sovereign entity from the developing world to tap international capital markets in a bid to seize lowered risk premiums for issuers.

Dubai Islamic Bank, Mitsubishi UFJ, Standard Chartered and UBS AG are acting as lead managers on the transaction.

Terms were as follows:

Amount: $1.25 billion
Maturity: Nov. 3, 2014
Coupon: 6.396% (Midswaps plus 370 basis points)
Price: Par
Spread: 406 basis points over Treasurys
Amount: AED2.5 billion ($681 million)
Maturity: Nov. 3, 2014
Coupon: 370 bps over 3-month Emirate interbank rate.
Price: Par
END

Dubai official statistics clearly in need of revision (Re-post)


It was hard not to miss this headline today in Gulf News: ‘Dubai’s GDP rises 0.3% in first quarter despite the global downturn’ according to figures released by the Dubai Statistics Centre.

Lest we forget the comparative period is Q1 2008 when the Dubai economy was overheating with a massive real estate and construction boom and traffic gridlocked at rush hour.

U.A.E. Falls for Second Day on Earnings, Lower U.S. Sentiment

United Arab Emirates shares fell for a second day, leading losses across the Persian Gulf, as Aldar Properties PJSC reported a decline in profit and lower consumer confidence data from the U.S. dampened investor sentiment.

Aldar, Abu Dhabi’s biggest property developer, slid the most in a week after it reported yesterday a 44 percent decline in third-quarter earnings. Abu Dhabi National Energy Co, the emirate’s state-controlled oil and gas company known as Taqa, retreated for a second day. Emaar Properties PJSC, the biggest developer in the U.A.E declined the most since Oct. 18.

“We have a very high correlation with the international markets these days whether negative or positive,” said Joice Mathew, head of equity research for United Securities LLC in Muscat. “Consumer confidence levels in the U.S. are having a negative impact not just on our markets, but markets around the world.”

Dubai Sukuk Sale Said to Get Bids Worth $6.55 Billion

Dubai’s planned Islamic bond issue attracted bids worth $5 billion for the dollar-denominated offer and 5.7 billion dirhams ($1.55 billion) for the dirham-floating note, bankers involved in the deal said today.

The emirate’s five-year fixed rate dollar bond may be priced to yield 375 basis points above the midswap rate, while its dirham Islamic bonds, or sukuk, may be priced at the same spread above the three-month interbank offered rate, according to the bankers who didn’t want to be identified because the sale hasn’t been completed.

Dubai and its state-controlled companies are raising funds after they amassed $80 billion of debt during a four-year real- estate boom, which produced the world’s tallest building and largest man-made islands. The global credit crunch had raised concern that the second-biggest sheikhdom in the United Arab Emirates may be unable to meet its debt obligations.

Federation of Euro Asian Stock Exchanges, October Newsletter (PDF)

TheFEAS September Newsletter, the monthly bulletin, bringing you general secretariat news, Member statistics on stock, bond and other volume comparisons on a monthly, year-to-date and prior period basis, in addition to market cap, currency changes, number of companies traded and index fluctuations, has been put on the FEAS website.

Here are some headlines from this issue:

- ABU DHABI SECURITIES EXCHANGE: Abu Dhabi Securities Exchange (ADX) today announced that the Global index provider, FTSE Group (“FTSE”) has finalized its annual review of country classification for the FTSE Global Equity Index Series (GEIS) and confirmed that the UAE is to be promoted to Secondary Emerging market.
- BAHRAIN: Bahrain Financial Exchange (BFX), the first multi - asset exchange in the Middle East and North Africa, launching in Q1, 2010, has announced the establishment of its Product Development Working Groups (PDWGs) for Islamic and Conventional asset classes.
- EGYPTIAN EXCHANGE: During the annual Summit organized by Africa Investor (Ai) in collaboration with NYSE Euronext, The Egyptian Exchange (EGX) won the award of the second most innovative African Exchange in 2009.
- ISTANBUL STOCK EXCHANGE: FTSE Index Company announced that, as a result of its annual country classification review, Turkey has been placed on its Watch List for possible promotion in FTSE’s Global Equity Index Series from Secondary Emerging to Advanced Emerging status.
- ISTANBUL STOCK EXCHANGE: Common Index between the Greek and Turkish equities’ markets. Athens Exchange and Istanbul Stock Exchange jointly announced on September 28, the issue of a common index. The Greece & Turkey 30 Index (GT-30), which is a customized index will be calculated, maintained and distributed by STOXX Limited, the leading provider of European equity indexes.
- TEHRAN STOCK EXCHANGE: In compliance with the Privatization plan 22,936.8 million Shares of state-owned Telecommunication Company of Iran Co (Equivalent of 50 percent of outstanding shares of company) were sold through one block trading on Tehran stock exchange at a price of Rs 3,409 per share. The value of this deal totaled $7,819 million. This deal was the biggest trading in the history of Tehran Stock Exchange.

Bond order book crosses Dh9bn on high demand

The fixed-rate dollar sukuk by Dubai, whose order book is reported to have crossed $1.5 billion (Dh5.5bn) on active demand, is likely to be priced in the range of 6.5-6.7 per cent, according to analysts.

The order book for the second part of the issue, which is a floating-rate dirham sukuk, is more than Dh3.5bn. It is likely to be priced at 375 basis points above the three-month Eibor, which was 1.955 per cent on the Central Bank website yesterday.

However, a source involved with the offering, told Emirates Business: "The deal is not over yet. We have not yet finalised the size and terms of the transaction."

Central banks need tools to halt bubbles

Gulf central banks should be given greater powers to help avert another asset bubble, says a senior official of the IMF.

The regulators need extra monetary policy tools to allow them greater control within markets, Dr Masood Ahmed, the director of the IMF’s Middle East and Central Asia Department, said yesterday.

“Central banks need to think not just about price stability but financial stability, that means looking at asset markets,” Dr Ahmed said. “That’s easier said than done as the tools for doing this are complicated, but that’s one of the tasks they need to look at.”

Aldar: the worst behind us

Aldar Properties, the developer behind the Abu Dhabi Grand Prix leisure project, said profits fell 43.4 per cent in the third quarter, but added that the property market has started to recover.

Net income fell to Dh429.8 million (US$117m) in the latest quarter compared to the same period last year, the company said.

Aldar also reported improving investor appetite for land and said the industry had moved past the worst of the property downturn.

Banks book Dh1.1bn in bad-loan charges

Two of Abu Dhabi’s biggest banks set aside a total of almost Dh1.1 billion (US$299.4m) in provisions as they braced for further possible losses on their loan books from defaulting customers.

Abu Dhabi Commercial Bank (ADCB), the emirate’s third-largest lender, booked Dh810m in bad-loan charges, while National Bank of Abu Dhabi (NBAD), the largest UAE lender by market capitalisation, set aside Dh284m.

The move virtually wiped out ADCB’s third-quarter profit, while NBAD posted a 41 per cent gain in the period.

Damas audit uncovers 50 deals

Unauthorised transactions valued at US$165 million (Dh606m) that led the chief executive of Damas International to resign this month included about 50 investments in a wide range of property projects, hospitals and regional companies.

The Middle East’s largest jewellery chain took stakes in the Bupa Cromwell Hospital in London, a shopping mall in Turkey and the Meydan City horse-racing-themed project on the outskirts of Dubai, according to a source familiar with the matter.

One of the largest deals involved the construction of twin 49-storey towers, called Angsana Hotel and Suites, on Sheikh Zayed Road. Most of the funds were spent on deals involving property transactions, but some cash was spent on other investments, including acquiring shares in Villa Moda, the Kuwaiti luxury retail chain.

Dubai's Veiled Obligations

Dubai officials are in London and Frankfurt this week on the final leg of a global tour to persuade investors the sheikdom is through the worst. On offer are $6.5 billion of conventional and Islamic bonds to fill government coffers just before Dubai and its corporate proxies face $5 billion of debt repayments.

With $10 billion still available under the bailout program underwritten by the Abu Dhabi-based Central Bank of the United Arab Emirates, Dubai will avoid a default.


But the preliminary offering documents for the $4 billion euro medium term note and $2.5 billion Islamic bond, or sukuk, leave questions unanswered. The biggest is over Dubai's total borrowings. According to the documents, Dubai's direct debt is about $19 billion, considerably less than the $80 billion most analysts estimate is the minimum.

Qatar targets increased gas exports to China

Qatar is eyeing more gas exports to China and Asia, where stronger demand can meet the tiny emirate’s fast-rising gas production.

As the gas-rich emirate inaugurated the latest liquefied natural gas export facility on Tuesday, the energy minister said the government is discussing more long-term contracts with Chinese and other customers as it sticks to its aim to double national output to 77m tonnes a year by September 2010.

Abdullah bin Hamad al-Attiyah said he was a big believer in the Chinese market.

Wait goes on for Dubai’s £10bn bond

Where is Dubai’s $10bn bond? The question has been making the rounds in Dubai business circles, as bankers and executives wonder when the emirate will bite the bullet and ask the United Arab Emirates central bank – which is bankrolled by Abu Dhabi – for the second tranche of a $20bn bail-out agreed earlier this year.

Bankers had been expecting the funds, structured as a Dubai five-year bond issue to which the central bank subscribes, to be disbursed in the summer, and help ease jitters about Dubai’s ability to repay some of its debt. It is estimated that $50bn (€34bn, £31bn) of debt comes due over the next three years.

Now, at the start of every week, the bankers tell you the $10bn is coming this week, while Dubai’s government has allowed the speculation to spread by sticking to vague statements.

Tuesday, 27 October 2009

FACTBOX-Gulf banks' exposure to Saudi groups (Latest available disclosure from individual banks)

Saudi family conglomerates Saad Group
[SAADG.UL] and Ahmad Hamad Algosaibi & Bros are restructuring
debt, as are their Bahrain-based banking units, in some of the
worst fallout from the credit crisis to hit the Gulf region.
Following are the latest exposure levels to Saad and
Algosaibi according to the banks themselves, sources close to
the banks or to media reports.

** new or updated entries

UNITED ARAB EMIRATES
ABU DHABI COMMERCIAL BANK ABCB.AD $609 million
ADCB has $609 million in exposure, according to a debt
prospectus published by the bank and dated Sept. 17.

ABU DHABI ISLAMIC BANK ADIB.AD yet to specify
Abu Dhabi Islamic Bank said Sept. 30 it had booked 836
million dirhams ($228 million) provisions as of June 30 but
declined to specify how much was related to Saad and Algosaibi.

FIRST GULF BANK FGB.AD $104 million
** First Gulf Bank on Oct. 21 said it had $104 million in
exposures and expects to make further provisions until the end
of 2010.

COMMERCIAL BANK INTERNATIONAL CBI.AD no exposure
Commercial Bank International on Sept 30 said it never
granted any credit facilities or loans to Saad and Algosaibi.

NATIONAL BANK OF ABU DHABI NBAD.AD $10.9 million
National Bank of Abu Dhabi reiterated on Sept. 30 its July
announcement that it had $7.5 million in exposure to Algosaibi
and $3.4 million in exposure to Saad.

INVEST BANK INVB.AD no exposure
Invest Bank said on Sept. 30 it had no exposure.
UNION NATIONAL BANK UNB.AD $60.5 mln
Union National said it had no exposure to Saad, but $60.5
million to Algosaibi. The Algosaibi exposure is in the form of a
joint loan of $20.8 million and trust receipts amounting to
$39.7 million.

NATIONAL BANK OF FUJAIRAH NBF.AD $25.4 million
National Bank of Fujairah has exposure to Algosaibi of $10.2
million and $15.2 million outstanding with Saad's Bahrain unit,
Awal Bank, it said on Sept 30. IIt has taken provisions of $3.3
million for Algosaibi and $6.5 million for Awal as of Aug. 31.

SHARJAH ISLAMIC BANK SIB.AD $15 million
Sharjah Islamic Bank had $15 million exposure to Algosaibi,
it said on Sept. 30, and has taken provisions of 50 percent.

NATIONAL BANK OF UMM AL QAIWAIN NBQ.AD $12.5 million
National Bank of Umm Al Qaiwain said its net exposure to the
two groups amounted to $12.5 million.

NATIONAL BANK OF RAS AL-KHAIMAH RAKB.AD "no exposure"
Rakbank reiterated on Sept. 30 its July announcement that it
had no exposure to the groups.

UNITED ARAB BANK UAB.AD "no exposure"
United Arab Bank, an affiliate of Commercial Bank of Qatar
COMB.QA, said Sept. 30 it has no exposure.

BANK OF SHARJAH BOS.AD "no exposure"
The bank, based in the emirate of Sharjah, has said it had
no exposure.

MASHREQ MASB.DU $400 million
Dubai-based Mashreqbank said on Sept. 16 it had $400 million
in exposure to Algosaibi and related parties.

EMIRATES NBD ENBD.DU "has exposure"
Emirates NBD has exposure, but it is not material, its chief
executive said in July.

DUBAI ISLAMIC BANK DISB.DU "no exposure"
Dubai Islamic Bank said it had no exposure.

ARAB EMIRATES INVESTMENT BANK AEIB.DU "no exposure"
Arab Emirates said it had no exposure.

KUWAIT
COMMERCIAL BANK OF KUWAIT (CBKK.KW) $119 million -report
Commercial Bank of Kuwait gave about $119 million in loans
to the troubled Saad Group, according to a newspaper report.

AL AHLI BANK (ABKK.KW) below $30 mln
Al Ahli Bank of Kuwait has exposure of less than $30 million
to Saad Group, but has no exposure to Algosaibi, Deputy Chief
General Manager Abdulla Alsumait, told Reuters.

NATIONAL BANK OF KUWAIT (NBKK.KW) $10 mln
NBK has exposure of about $10 million, the bank's chief
executive said in July.

GULF BANK (GBKK.KW) "has exposure"
** The bank said Oct. 25 bad loans would weigh on profits
through mid-2010. Its exposure to the groups could be contained
and dealt with, state news agency KUNA cited the bank's chief
executive as saying on Sept. 28.


KUWAIT FINANCE HOUSE (KFIN.KW) "minimal"
KFH, in which the country's sovereign wealth fund owns a
24.1 percent stake, said in June it had minimal exposure to the
two Saudi groups.

OMAN
BANK MUSCAT BMAO.OM $171 million
Bank Muscat, Oman's biggest bank, said on June 11 that Saad
and Algosaibi owed the lender and its unit in Bahrain a combined
66 million rials ($171 million).

NATIONAL BANK OF OMAN NBO.OM $16.89 million
National Bank of Oman said it had a limited interbank
exposure totalling 6.5 million rials ($16.89 million) to The
International Banking Corporation and Awal Bank in Bahrain.

BANK DHOFAR BDOF.OM $10.39 million
Oman's Bank Dhofar said it had around 4 million rials
($10.39 million) in exposure to the two Saudi groups.

OMAN INTERNATIONAL BANK OIB.OM "no exposure"
The bank said in June it did not have any exposure.

AHLI BANK ABOB.OM "no exposure"
Ahli Bank said it holds no exposure.

BAHRAIN
AHLI UNITED BANK AUBB.BH Saudi exposure
** Bahrain's biggest bank said on Oct. 25 it had increased the
provisions level it booked for its "impaired Saudi corprate
assets" to 75 percent during the third quarter from 65 percent
during the second quarter. It did not breakdown its exposure.

ITHMAAR ITHMR.BH UNIT SHAMIL BANK "minor"
Shamil Bank, a unit of Bahrain-based Islamic lender Ithmaar,
has minor exposure to the two groups.

QATAR
QATAR NATIONAL BANK QNBK.QA "limited"
The bank has limited exposure to Algosaibi, al Sharq
newspaper reported in July, citing the lender's executive
general manager.

SAUDI ARABIA
** Saudi Arabian banks have yet to announce exposure to the two
Saudi groups, but they booked higher unspecified provisions
against bad loans during the third quarter. [ID:nLO578403]

(Compiled by John Irish, Nicolas Parasie and Frederik
Richter; Editing by )

© Thomson Reuters 2009 All rights reserved

Dubai is super enough, thanks

Dubai has sufficient superlatives – record-setting landmarks unique in their size, cost or concept — to last it for the next decade – so enough already, says Deyaar CEO Markus Giebel.


“I endorse having the tallest building in the world, the first seven-star hotel in the world, the palm,” he says. “What I don’t endorse are attempts to now outdo these superlatives…they are going to last us the next 10 to 15 years.”

Dubai is home — amongst other attractions — to the world’s largest indoor ski slope, the world’s tallest tower, and the world’s first, albeit self-rated, seven-star hotel that also sports its own Rolls Royce fleet and helicopter landing platform. The global financial crisis brought a real estate boom in the emirate to a screeching halt, leading to a raft of new, hugely ambitious projects — including a 1-km high tower and the world’s largest mall – to be shelved or delayed.

Saudi bond market needs sovereign benchmark

The strength of Saudi Arabia's public finances should not prevent the government from issuing sovereign Islamic bond -- or sukuk -- which will be critical to the development of corporate sukuk issues, bankers said.

Kamal Mian, head of Saudi Hollandi Bank's Islamic banking unit, also said that any of Saudi Arabia's 130-plus listed firms can tap the sukuk market, but the high financial cost linked to ratings from international agencies makes bank funding "always cheaper."

"Rating is expensive ... The (sukuk) Saudi market needs a local rating agency," Mian told the Reuters Middle East Summit in Riyadh.

OPEC: OIL'S TOO EXPENSIVE (Re-post)

Dr. Robert Mabro, a senior adviser to OPEC, thinks oil prices are "divorced from the fundamentals" of the market.

I'm always a little jolted to hear OPEC say oil prices are too high. But major oil producers, particularly Saudi Arabia, actually don't want prices to climb too quickly right now. That would squelch any chance at a global economic recovery.

It would also mean billions of dollars of wasted investment for many of those countries. Consider Iraq, for example, which is planning a major expansion of its Rumaila oil field (in a joint venture with BP and CNPC). The project would nearly triple Rumaila's production to about 2.8 million barrels per day. But if there isn't enough demand in the world market to soak up that excess oil, the investment is a waste.

U.A.E. Stocks End Two-Day Rally as ADCB Net Drops; Kuwait Gains

United Arab Emirates shares fell for the first time in three days as Abu Dhabi Commercial Bank PJSC reported a drop in profit and on concern that gains earlier this week outpaced the prospects for earnings growth.

ADCB, the country’s third-biggest bank by assets, tumbled the most since January. Emaar Properties PJSC, the biggest real- estate developer in the U.A.E., ended a three-day rally. Emerging-market stocks dropped the most in seven weeks as raw- materials producers declined on lower commodity prices. Abu Dhabi’s index lost 0.7 percent to 3,145.4 and the Dubai Financial Market General Index fell 0.8 percent to 2,319.37. Dubai’s index rose 4.2 percent in the previous two days.

“Some of the more liquid large cap stocks were up between 3 and 6 percent yesterday, so a round of profit-taking was inevitable, especially with the international markets looking weaker,” said Ian Munro, head of equity research at Mac Capital Advisors in Dubai.

Aldar Properties Q3 profit plunges 43 pct

Abu Dhabi's Aldar Properties made a third-quarter net profit of 430 million dirhams ($117.1 million), down 43.4 percent from the previous quarter.

The emirate's largest developer by market capitalisation made a net profit of 759.50 million dirhams in the comparable quarter in 2008.

Aldar said on Tuesday it made a nine-month net profit of 1.57 billion dirhams down from 3.36 billion dirhams in the same period last year.

It did not give quarterly data which Reuters calculated based on previous statements.END

Qatar diverts LNG from U.S. to China

Qatar's oil minister said Tuesday that the Gulf sheikdom was diverting liquefied natural gas, or LNG, shipments to China from the U.S. as demand softens in North America.

Abdullah bin Hamed Al Attiyah told reporters that the gas-rich state, which plans to produce 77 million tons a year of LNG by September 2010, is in talks with China about long-term supply of the fuel.

China is increasingly competing for access to world energy to power an economy that's growing at a time when the U.S. continues to be weighed down by the global financial crisis hitting energy demand in North America.

Mashreq sees tough '10, rising loan defaults

UAE-based Mashreq bank expects 2010 to be a challenging year for business with increased likelihood of property loan defaults, a senior official said on Tuesday.

Douglas Beckett, head of retail banking, said the bank has been spared bad loans in the property sector this year, but has been hit by credit card and personal debt defaults.

“The property sector has not been a problem for us this year. We expect that we will see increased levels of challenge in our property portfolio next year,” he told Maktoob Business on the sidelines of a conference in Dubai.

UAE's ADCB Q3 profit nosedives 90 pct

Abu Dhabi Commercial Bank posted a 90 percent drop in third-quarter net profit, falling short of analysts' expectations, as the lender booked hefty provisions, sending its shares down over 8 percent.

ADCB, the sixth largest bank in the UAE by market value, posted a net profit of 44 million dirhams ($11.98 million) in the third quarter versus 447.6 million dirhams in the year earlier period, according to a statement on the bourse's website on Tuesday.

"The bank continued to set aside provisions to cover any probable loss in its loan portfolio and some investments which had a negative impact on the bank's results for Q3," Eissa Al Suwaidi, chairman of ADCB, said in a statement.

DP World sees tough Q4; CFO to join parent firm

Port operator DP World DPW.DI reported a 6-percent fall in third-quarter container volumes on Tuesday and said its 2009 results would be in line with market expectations despite a challenging fourth quarter ahead.

The firm also said its chief financial officer would step down at its December board meeting and join state-linked parent company Dubai World as group CFO, adding that no replacement had yet been found. [ID:nLR395474]

The decline in container volumes meant a 8 percent fall year on year for the nine months to Sept. 30, DP World said in a statement on the Nasdaq Dubai exchange website.

Dubai's bond plan likely to target $1 billion first

The government of Dubai's fresh borrowing program is likely to initially raise $1 billion through an Islamic bond to refinance the debt held by the aviation department, said the head of Emirates NBD Capital, which is involved in the program.

Chief Executive Suresh Kumar told Reuters on Tuesday that the first tranche, part of the $6.5 billion conventional and Islamic bond program launched last week, would set the benchmark for the rest and the pricing would have a spread of around 300 basis points.

"My sense is it will be focused on the Islamic certificate program to raise possibly $1 billion to be used to meet the maturity of the DCA (Department of Civil Aviation) sukuk," Kumar told the Reuters Investment Summit in Dubai.

Shuaa Saudi Arabia has secured 4 mandates

Shuaa Capital's SHUA.DU Saudi unit said on Tuesday it has secured four investment banking mandates and is sounding out up to nine further deals in the largest Arab economy.

"The four we have confirmed," Shuaa Saudi Arabia's Chief Executive Omar Jaroudi told the Reuters Middle East Investment Summit in Riyadh, declining to identify the firms.

Shuaa Saudi Arabia was advising one education firm, a retailer on separate merger and acquisition deals, one manufacturer on drawing a business plan and a real estate firm on a private placement, he said.

Dubai to seek investors in New York

Some of Dubai’s biggest listed companies will make presentations next week in New York to stoke investor interest as firms in the GCC mount a recovery from the financial crisis.

The road show, scheduled for next Monday and Tuesday, aims to bring together the management of firms listed on the Dubai Financial Market and NASDAQ Dubai with large US investors deploying capital overseas.

“These conferences allow direct contact between senior management and the professional investment community,” said Oliver Schutzmann, the head of investor relations at Shuaa Capital, one of the firms listed in Dubai that will take part in the presentations. “This is an excellent opportunity for institutional investors to get introduced to companies they perhaps haven’t met yet.”

Emirates NBD joins rush for bonds

Emirates NBD, the largest local lender by assets, is preparing to join the race to raise fresh funds and issue bonds as credit markets show signs of easing.

The disclosure comes after the bank surprised analysts with an unexpected 3 per cent increase in third-quarter profits, compared with the same period last year.

“This is an opportunity to test the market after it was closed for the last 18 months,” said Rick Pudner, the chief executive.

Al Gosaibis seek deal on debt

The embattled al Gosaibi family of Saudi Arabia has sought the help of the UAE Central Bank to broker a deal with lenders in the Emirates over the estimated US$3 billion (Dh11.01bn) of debt they are owed as a result of one of the Middle East’s biggest financial scandals.

A meeting between family representatives and Central Bank officials took place last week as part of the Saudi family’s plans for a “global” settlement of their debt problems, and was described as “very useful”, according to a source familiar with the discussions.

The move by the al Gosaibis represents an easing in the problems caused by their bitter dispute with Maan al Sanea, the billionaire head of Saad Group accused of defrauding them.

DIC's new loan has fat fees, little pieces (Re-post)

MEED is reporting further details of Dubai International Capital's new 2-year, $550 million syndicated loan.

As I suspected when bankers divulged that the loan had been secured last week, the new money is designed to refinance $600 million in loans. Bankers had told The National that those loans weren't due until November. But according to MEED, DIC paid them with a bridge loan in August. The new $550 million loan refinances that bridge loan. MEED says DIC is paying 4 percentage points over Libor, or about 4.28 per cent. But banks are also being rewarded with fees of up to 3 percent of the deal, making the overall borrowing cost over 7 per cent. This may have negative implications for the pricing of Dubai's new bonds, which judging from Dubai CDS prices could be priced below 4 per cent. Given that Dubai is unrated, and that the uncertainty surrounding Dubai's use of its bailout funds, however, and lack of transparency from Dubai Inc. companies about their own restructuring, that rate may end up being much higher. If this were the case, however, it does stand to reason that the CDS spread would also be much higher.

When DIC borrowed the $600 million in October, 2006, it paid only 0.8 percentage points over Libor. Because Libor at the time was well over 5 per cent, DIC was paying roughly 5.8 per cent on those loans. Now it appears to have refinanced the loans at an even lower rate, provided you don't include the fees. Fees back then were reportedly no higher than 45 bps, so the overall cost of borrowing was 6.25 per cent. Some have suspected that companies have been convincing banks to offer them lower interest rates in return for heavily padded fees, which with fees now of 300 bps seems to be part of the DIC deal. DIC has therefore refinanced at a higher rate about a percentage point higher than its original 2006 financing.

What was the money for? Helping to pay 675 million pounds for Travelodge of the UK. That was the same year DIC bought Madame Tussaud's. It has since sold off part of Travelodge and all but 20 per cent of Tussaud's to Blackstone. Travelodge's expansion plans ran smack into the global recession, and DIC earlier this year had to inject 20 million pounds into Travelodge as part of a deal to refinance the hotel chain's own debt.

Now, according to MEED, DIC is offering to let banks lend as little as $15 million each of the $550 million in order to make the deal more digestible to more banks.

Beach hotels lead Dubai tourism recovery (Re-post)

Dubai beach hotel occupancy and room rates are almost back to boom time levels as this key sector of the economy leads the local recovery.

However, it is a different story for the city hotels where a tidal wave of new room inventory is keeping the market under pressure, making life for the new entrants and old favorites equally difficult. At the same time Dubai exhibition and conference attendance has slumped knocking another source of guests.

Beach hotel boom

On the beach the hotels are booming. The Royal Meridien is 96 per cent occupied and charging AED1,500 per night again. Jumeirah says its beach hotels are also full.

Investor confidence in Qatar surpasses GCC’s

Investor confidence in Qatar was higher than the GCC average in October thanks to the the strength of its macro economy, a survey by Shuaa Capital found.

In its latest GCC Investor Sentiment Report, Shuaa also said the price of crude oil was expected to rise further and that investors were also bullish on gold.

Qatar’s investor confidence index jumped 7.3 points to 143.1, which is higher than the GCC average of 132.2 points, said Shuaa Capital.

“The Qatar Index has consistently been one of the highest Indices in the region and after last month’s dip, Qatar has bounced back by recording its highest ever index of 143.1 this month,” said Oliver Schutzmann, Chief Communications Officer of Shuaa Capital.

UAE fund eyes India power for Indonesian coal

The UAE's Middle East Coal (MEC) is in talks to buy equity stakes in India's power plants in exchange for long-term coal supply, an executive said on Monday.

MEC is joint venture between UAE investment fund RAK Minerals and Metals Investments (RMMI) and UAE-based mining company Trimex. RMMI won a license in March to build a 150 km (93 miles) rail link carrying coal from a mine in Indonesia's East Kalimantan province to a coal terminal.

"We are close to signing a contact with a number of Indian power plants who need to be supplied with coal over the coming 15 years, the deals will be finalised by the end of next month," said Madu Koneru, vice chairman of Middle East Coal.

Qatar eyes China as big new LNG volumes come online

Qatar is looking to China to absorb some of the huge increase in liquefied natural gas (LNG) supplies as the world's biggest LNG exporter nears completion of its plan to double production capacity this year.

Qatar inaugurates on Tuesday the second of three giant LNG plants it has started up in 2009. The plants are the largest in the world, and were expected to help Qatar's economic growth this year outperform oil-exporting Gulf Arab neighbours constrained by OPEC output quotas.

Tiny Qatar sits atop the world's third-largest gas reserves and has gambled tens of billions of dollars on developing its resources, but a huge amount of new supply is coming to a market which has lost some of its appetite in the biggest economic downturn in decades.

Dubai's $6.5B Bond Program Could Be Priced At 6% - Rasmala

Debt-laden Dubai government's latest $6.5 billion bond program could yield 6%, higher pricing than seen for similar bonds issued by oil-rich Abu Dhabi, according to a senior executive at Dubai-based investment bank Rasmala.

Eric Swats, head of asset management at Rasmala, said in a radio interview with Dubai Eye Monday that he expects investor interest in the debt if its priced at around 6%.

The Government of Dubai issued a preliminary prospectus on Oct. 21 to raise $4 billion through a Euro Medium-Term Note, or EMTN, program for "infrastructure, financing and general budgetary purposes," according to a copy of the document seen by Zawya Dow Jones.

At the same time Dubai's Department Of Finance, through a Cayman Islands entity known as Dubai DOF Sukuk Ltd., issued a prospectus to possibly raise $2.5 billion in Islamic bonds, or sukuk.

The Dubai Department of Finance is half way through a round of global roadshows that began last week in Hong Kong to market its debt to investors. Next stops are London and Frankfurt this week.

Dubai Bonds May Yield Same as Companies One Level Above Junk

Dubai, in its first international bond sale in 18 months, is being treated by investors the same as Russian companies with the lowest investment-grade ratings.

The sheikdom’s planned dollar-denominated securities, which aren’t rated, will be sold to yield 350 basis points to 400 basis points over the benchmark midswap rate, said three investors approached for the sale. That equates to a premium of 50 basis points, or 0.50 percentage point, more than debt sold by Russian issuers such as OAO Sberbank, which is rated BBB, two levels above high-yield, high-risk debt, Commerzbank AG says.

“It’s pretty fair to consider Dubai an investment grade credit at the BBB- or even a BBB level,” Luis Costa, an emerging-market debt strategist in London, said in a telephone interview. “Although the credit-quality may be aligned to its other BBB-area peers, you still have to input some premium given the leverage in Dubai.”

Monday, 26 October 2009

Gulf Bank Q3 net profit plunges 98 pct, shares down

Kuwait's Gulf Bank (GBKK.KW) posted a 98 percent plunge in its third-quarter net profit, driving its shares down 3 percent on Monday.

Net income in the three months to Sept. 30 came in at 469,000 dinars ($1.64 million), after 29.925 million dinars of net profit in the same period in 2008, the bank said in a statement on the bourse website on Monday.

The lender made a net loss of 7.02 million dinars in the first nine months, compared with 85.96 million dinars of net profit in the year-earlier period, it said.

Prudential eyes Dubai sharia funds, Indonesia licence

British insurer Prudential (PRU.L) plans to launch two Islamic equity funds in Dubai in the coming months and apply for an asset management licence in Indonesia, an official said on Monday.

Demand for sharia funds would be strong once Dubai bounces back from an economic slowdown, said Mark Toh, Prudential Corp Asia's regional Islamic fund management head.

"If Muslims have a choice, they would invest in (Islamic funds), previously there were none," Toh said on the sidelines of a fund launch. "There are very little of such products available not just for Malaysia, but for the global market as well."

Deyaar slashes workforce by 20 pct

Deyaar Development said on Monday it has slashed its workforce by 20 percent as it looks to cut costs amid the collapse of Dubai’s once-booming real estate market.

The Dubai-listed developer said in a statement the job cuts were “in line with the company’s commitment to align those resources with its current and medium-term business requirements”.

The developer said the cuts were “the only such measure carried out by Deyaar since the start of the global financial crisis”.

Dubai Plans to Sell 5-Year Dollar, Dirham Bonds, Investors Say

Dubai’s government plans to sell five-year dollar and dirham denominated bonds as part of its $6.5 billion medium-term fund-raising plan, according to three investors who have been approached for the sale.

The dollar bonds may be priced to yield 350 basis points to 400 basis points over the benchmark midswap rate, said the investors who didn’t want to be identified because the talks are private. The dirham bonds may be priced to yield in the “high” 300 basis points above the 3-month emirates interbank offered rate, they said.

“This is a pricing sweet spot,” said Norval Loftus, head of sukuk and convertible bonds at Matrix Corporate Capital Ltd. in London, which manages $2.5 billion in assets. “A high 300 basis point spread over swaps is the perfect pricing zone because as an investor you are being compensated very generously for the risks you are taking.”

It’s the first international bond sale from Dubai since June 2008, when Dubai Electricity & Water Authority, the Gulf emirate’s state-run utility known as Dewa, raised $1 billion through a five-year floating rate note by paying 125 basis points above emirates interbank offered rate, Bloomberg data show. One basis point is 0.01 percentage point.END

Dubai Index Gains Most in Two Weeks on Emirates NBD Earnings

Dubai shares climbed the most in almost two weeks as Emirates NBD PJSC reported third-quarter earnings that beat analysts’ estimates.

Emirates NBD, the United Arab Emirates’ biggest bank by assets, advanced to the highest intraday level in a week. Aramex PJSC, the Middle East’s biggest courier company, added as much as 2.3 percent. The Dubai Financial Market General Index gained 2.9 percent, the biggest jump since Oct. 14, to 2,328.89 at 12:54 p.m. in the emirate.

Better-than-expected earnings from Dubai’s biggest companies are boosting investor confidence. Emaar Properties PJSC, the heaviest weighted member in Dubai’s benchmark index, on Oct. 22 posted a profit that was almost twice as high as analysts estimated. The shares rose as much as 4.5 percent.

Gosaibi to seek Sanea default in U.S. court

Saudi family conglomerate Algosaibi will ask a New York court for a default judgment against the billionaire head of the Saad Group, Maan al-Sanea, over allegations he defrauded the company out of $10 billion, a spokesman said on Sunday.

Representatives of al-Sanea and the Saad Group could not be reached for comment on the case, which has drawn attention along with other litigation in the United States because of debt restructuring at Ahmad Hamad Algosaibi & Bros (AHAB) and Saad Group that worsened the Arab Gulf financial crisis.

AHAB spokesman Jim Courtovich said al-Sanea had not answered its July 15 lawsuit in New York State Supreme Court over allegations of $10 billion in loan irregularities. Maan al-Sanea is a former employee of AHAB.

Emirates NBD Q3 profit up, beats expectations

Dubai bank Emirates NBD ENBD.DU posted a small rise in third-quarter net profit on Monday, sending its shares higher as it beat analysts' expectations, but said it remained cautious after soaring credit impairments dampened growth.

Emirates NBD, the United Arab Emirates' largest bank by assets, said net profit rose three percent to 1.05 billion dirhams ($285.9 million) from 1.02 billion dirhams in the third quarter of 2008.

Two analysts polled by Reuters had forecast an average third-quarter net profit of 580 million dirhams. [ID:nL4495965]

Islamic Debt to Rally on Nakheel Recovery, GE Sukuk

Islamic bonds are poised for record gains amid confidence that Nakheel PJSC, the developer of palm- tree shaped islands off the Dubai coast and the market’s biggest issuer, will avoid default.

“Nakheel is the flagship,” said Yannick Lopez, who helps oversee Paris-based OFI Asset Management’s $30 billion in assets. “A default by Nakheel could have wider implications” on the Islamic bond market, he said. “Our view is that the probability of default on this name is quite low.”

Almost non-existent a decade ago, the Islamic bond market has grown to $130 billion, according to Moody’s Investors Service. Prices are rebounding after three defaults in the past year because investors expect Dubai’s government to prevent state-owned developer Nakheel from failing to make payments on its obligations. The company’s bonds due Dec. 14 rose to a record 108 cents on the dollar this month, up from 93.5 on Sept. 2 and 70 percent higher than a February low.

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UAE interbank rates hit multi-year lows

Interbank lending rates in the UAE fell to multi-year lows yesterday as the dollar-pegged country brings the cost at which banks lend to each other into line with its Gulf neighbours and the United States.

Since August, the UAE Central Bank has undertaken a raft of measures to lower the rates it long said were too high.

The central bank took control of the fixing process earlier this month when participating banks began submitting their daily rates to the central bank.

Algosaibi to meet creditors in a bid to strike deal

Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (Ahab) plans to meet creditors within weeks in a bid to reach a global settlement with lenders, sources said yesterday, as around $10 billion (Dh36.7) in outstanding obligations loom.

The debt implosion at Saudi firms Algosaibi and Saad Group has sent shockwaves through the region, left foreign and local banks facing massive debt exposures and sparked a flurry of litigation around the globe.

Some bankers say the total cost of writedowns from both groups may hit $22bn and affect 120 banks.

Qatar’s $14bn airport to open in 2011

Qatar is on track to open its new US$14 billion (Dh51bn) international airport in 2011 as the world’s largest gas exporter looks to diversify government revenues and stimulate employment, an official said on Sunday.

Speaking at an aviation conference in Doha, Qatar, the chairman of the country’s civil aviation authority said the new airport would have capacity for 24 million passengers and cargo of 1.4 million tonnes a year.

“The new $14bn airport will be over 22 kilometres and open in 2011,” Adul Aziz Al Noaimi said.

Fraud: more diligence is due

It is more than a year since Dubai launched a highly publicised clampdown on corruption, which led to the arrest of several executives from some of the emirate’s top property developers and financial institutions.

But while Dubai grabbed the international headlines, it represented just the tip of the iceberg in a region that has been identified as a hot spot of corruption.

Kroll, an international risk consultancy, said last week the Middle East was the world’s only region to see a rise in fraud in the past year. It singled out corruption and bribery as the single largest threats.

US helps Dubai borrow cheaply

Could Dubai be on the verge of getting a bailout, courtesy of Washington?

Dubai’s bond roadshow does not include a stop in the US. But it is conditions established there that analysts and economists say appear to have reopened international credit markets to the emirate.

To revive the US economy, the Federal Reserve has pushed its lending rates to their lowest since the Second World War. That and concerns that ballooning debt could fuel inflation have sparked a boom in demand for higher-yielding bonds elsewhere.

Gulf Investors Sold $4.3 Billion in Dubai Properties

Gulf Arab nationals sold properties valued at 15.7 billion dirhams ($4.3 billion) in Dubai during the eight months ended August, the Real Estate Regulatory Agency and the Land Department said in a joint statement today.

Land sales by developers and individuals accounted for 10.8 billion dirhams of Dubai’s total property sales between January and August. Apartment sales followed with 2.9 billion dirhams and villa sales reached 2 billion dirhams, RERA said without providing comparative figures.

The value of land transactions in the first three quarters of this year slid to 14.9 billion dirhams, compared with 61 billion dirhams a year ago, according to data posted on the Land Department’s Web site.

Abdullah brothers to repay Damas transactions

Dubai jeweller Damas International Ltd DAMAS.DI on Sunday said that two executives and the former chief of the company have pledged to repay nearly $165 million "unauthorized transactions" that led to the chief executive's departure.

Nasdaq Dubai-listed Damas recently appointed Hisham Ashour, the former deputy chief executive, to replace Tawhid Abdullah after "unauthorized transactions" for nearly $165 million were discovered. [ID:nLC467286]

"The three Abdullah brothers have signed a formal settlement agreement with the company in which they have committed to repay in full and in cash the full value of the transactions under review," according to a statement posted on the Dubai website.

Kuwait may post big surplus

Opec member Kuwait is expected to post a budget surplus of 9.75 billion Kuwaiti dinars ($34.14bn) in its 2009/10 fiscal year if oil prices remain at current levels, reports said yesterday.


The world’s fourth-largest oil exporter is expected to post about 5.5bn dinars for the next five months of the fiscal 2009/10 that ends in March, finance ministry sources said.


Current oil prices at around $80 a barrel will drive up the surplus of the Gulf state, which has assumed its crude, the main revenue earner, would fetch $35 a barrel in its 2009/10 budget.


Kuwait posted a budget surplus of 2.74bn dinars in its 2008/09 fiscal year, on higher oil revenues.END

Bahrain’s positive growth is praised

Bahrain’s two per cent gross domestic product (GDP) growth this year is a sign of good things to come, said a global financial expert yesterday.


Standard Chartered Bank Middle East North Africa and Pakistan global markets regional head Marios Maratheftis said the positive growth, though it was low compared with the 7pc in the previous year, was very creditable in view of the other major Gulf economies recording negative growth.


Speaking to the media at the Ritz-Carlton Bahrain, Hotel and Spa, the Dubai-based Mr Maratheftis said Bahrain’s GDP will grow by 3pc or more next year and will contribute significantly to the GCC region, which is slowly emerging as a major player in the global economic scenario.


Dubai ponders $6.5bn debt issuance

Dubai is gauging investor appetite for debt issuance of $6.5bn as the emirate seeks to take advantage of easing credit markets to set the commercial hub on a more stable financial footing.

Appetite for its sovereign debt will be crucial as Dubai seeks to refinance its pile of short-term loans and bonds and replace them with longer-term debt.

“Dubai can probably raise money, but the key issue is how much they will have to pay,” said Chavan Bhogaita, head of credit research at the National Bank of Abu Dhabi. “We will have to wait to see what the investor appetite is.”

Sunday, 25 October 2009

Dubai unveils $6.5 bln borrowing; CDS near 1-yr low (Complete article)

The government of Dubai is set to launch a fresh borrowing programme worth $6.5 billion in its latest effort to consolidate its huge debt and further spend on infrastructure for the emirate's struggling economy.

The latest programme, due to be finalised in the next few days at the end of its roadshow, comes as the cost of insuring Dubai's debt falls towards a recent one-year low.

This brightens the prospect for the Dubai government which is in the middle of restructuring some of its $80 billion debt owned together with its state-owned firms.

Bankers, who attended the roadshows in Abu Dhabi and Dubai, told Reuters the government had launched a $4 billion euros ($6 billion) medium term note programme and a $2.5 billion Islamic bond, or sukuk, used for general corporate activities, including infrastructure.

"The meeting was full. They seem to be saying everything is going okay. These concerns (over Dubai's ability to restructure debt) seem to be ironed out," a senior banker who attended the meeting told Reuters on Sunday.

The Dubai government has about $19.7 billion of direct debt borrowing, one of the bankers said, citing the roadshow presentation, adding the funds would not be used for state-linked entities.

It will wrap up the roashow in London and Frankfurt on Tuesday after starting it in Hong Kong on Oct 22. A prospective international bond sale would be the first from the emirate in more than a year and comes after Dubai International Capital, an investment firm owned by the ruler of Dubai, launched earlier this month syndication for a $550 million loan.

Credit Default Swaps (CDS) prices for the five-year Dubai debt stood at 298.3 DUBA5YUSAC=MP at the end of Friday, close to a one-year low of 291 set last Tuesday.

"Compared to the past, the level of disclosure is more," said one of the bankers. "They also emphasised that as far as the Dubai government was concerned the UAE will back them and Dubai is an integral part of the UAE."

Dubai, one of the seven emirates in the country, propelled itself into the spotlight as a tourism hub during a six-year oil-fuelled boom, but the downturn rocked its foundations based on excess lending and a transient expatriate population.

Investors -- often starved of information in a region known for its lack of transparency -- are keen to see how Dubai is able to tap markets as its real estate sector slumps under the weight of the financial crisis.

The emirate has at least $4.5 billion to restructure over the next two months, including a $1 billion Islamic bond from the emirate's civil aviation department and the world's largest Islamic bond to date, a $3.5 billion issue, from property developer Nakheel. ($1=.6664 euros) (Edsiting by Mike Nesbit)

Bahrain's AUB Q3 profit falls 45 pct on provisions

Ahli United Bank AUBB.BH (AUB), Bahrain's largest lender by market value, posted a 44.9 percent drop in third-quarter profit on higher loan provisions.

The bank said net profit came in at $43.5 million for the three months to Sept. 30. The lender booked $68.14 million in provisions during the third quarter, up from only $10.2 million in the year-earlier quarter.

AUB had increased provisions on its Saudi corporate loan portfolio to 75 percent from 65 percent during the second quarter, it said in a statement on Sunday.

Kuwait Gulf Bank Q3 profit hit by loan provisions

Kuwait's Gulf Bank (GBKK.KW) said bad loans would weigh on profits through mid-2010 on Sunday after it used all of the 42 million dinars ($147.1 million) of operating profit from the third quarter as provisions.

The bank did not publish a figure for net loss or net profit for the third quarter ending Sept. 30.

"The bank decided to take aggressive provisioning against its non-performing loans and credit facilities, particularly the regional portfolio, transferring all its operating profit to the existing provisions," the lender's Chief Executive Michel Accad said in the statement.

Dubai Government Sets Up $6.5 Billion Medium-Term Note Program

The Dubai government set up a $6.5 billion program to sell medium-term notes as the emirate plans its first international bond sale since June 2008, according to two investors who attended a marketing meeting in Dubai today.

The sale of Islamic bonds and those that don’t comply with Muslim banking rules may take place as soon as next week, said the investors who didn’t want to be identified as the meetings are private. The sheikhdom is targeting investors in the Middle East, Asia and Europe. The offering is separate from a $10 billion fund-raising program, which is part of a $20 billion support fund that the Dubai government set up for state-related companies.

The bonds include a $4 billion euro-note program, according to a prospectus seen by Bloomberg. Dubai also established a $2.5 billion program to sell Islamic bonds, or sukuk, according to the two investors.

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United Arab Emirates Shares Gain on Earnings; Kuwait Declines

United Arab Emirates shares advanced as better-than-expected earnings from Emaar Properties PJSC and First Gulf Bank encouraged buying after three days of losses even as other regional markets fell.

Emaar, the most heavily weighted stock on Dubai’s benchmark index climbed the most in almost a week after posting net income that was almost double analysts’ forecasts. First Gulf gained for a second day after last week reporting a 9.4 percent profit increase. The Dubai Financial Market General Index climbed for the first time in four days, rising 0.9 percent to 2,263.10, its highest close since Oct. 19. Abu Dhabi’s measure added 0.9 percent.

“Companies are getting out of the rut slowly and at least earnings are mostly coming out in a positive direction,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi.

Kuwait's Global debtors onboard for restructuring

Kuwait's Global Investment House says most of its creditors have agreed to a restructuring plan, as the country's largest investment bank looks to resolve a $3 billion debt default.

Global said Sunday an "overwhelming majority" of its creditors have approved the terms of restructuring and a timeline for completing it has been proposed. It did not provide any further details.

Global had been meeting with creditors to restructure almost $3 billion in loans on which it had defaulted. It previously announced the restructuring plan, but reports surfaced that some creditors had raised concerns.

The global financial crisis has hit this small oil-rich state hard, mostly affecting investment banks.

In April, Global reported its first ever annual loss.END

Dubai Sets Up $4 Billion Euro Medium-Term Note Program

The Dubai government has set up a $4 billion euro medium-term note program and is meeting investors ahead of a sale, according to an offer document sent to investors and received by Bloomberg News today.END

Iran Investment Monthly-Oct09 Turquoise Partners (PDF)

Market Overview 2
In September, the Tehran Stock Exchange (TSE) had a
volatile month. Stocks of most commodity companies and
the Telecommunications Company of Iran (TCI) lost value,
while pharmaceutical and financial stocks rallied. The Iranian
OTC market was officially opened in this month.

Turquoise Iran Equity Investments 4
The Turquoise Iran Equity Investments portfolios did not
change very much in September. Portfolio One NAV lost
0.2% in value while Portfolio Two NAV gained 1.9%. This
section provides data and charts on the performance of the
portfolios.

Country Overview 6
The latest developments on Iran’s nuclear dossier will be
discussed in this section.

Economy 7
Iran’s natural gas industry, the latest inflation data and Iran
joining TRACECA will be covered in this section.

Islamic asset mgt needs products, distribution to thrive

The infant Islamic management industry lacks a large enough range of products and distribution channels to increase to challenge its conventional peers in catering to Muslim wealth, experts said.

The nascent $1 trillion Islamic finance industry is walking a fine line between replicating conventional products and establishing its own genuine products that adhere to Islam's prohibition of interest.

Asset management is seen as a sector where the industry could easily create products according to its own set of values, but it has not yet established the range of products to compete with conventional asset management.

A Diamond in the Desert by Jo Tatchell and Dubai by Jim Krane: review


Abu Dhabi, the capital of the United Arab Emirates, is a city of extraordinary numbers. Over the past 50 years, a ramshackle desert outpost has become, thanks to eight per cent of the world’s proven oil reserves, the richest thicket of skyscrapers on earth. Abu Dhabi has an estimated $1trn invested abroad and its 420,000 citizens, led by the Al Nahyan family, are worth an average of $17m each. Seventy-nine miles up the coast in Dubai, meanwhile, their cousins and rivals the Al Maktoums have created a city with the world’s tallest building, the Burj Dubai, and new archipelagos – including the celebrity-ridden Palm Jumeirah and World islands – dredged from the Persian Gulf. As Arab investors withdrew from American markets after 9/11, their money flooded into Abu Dhabi and Dubai. Their burgeoning sky and coastlines – and the recent plugging of gaps in shaky Western economies – are the result.

But in the global financial crisis, some, at least, of the wheels have come off the Emirati money machine. Dubai, reliant on the vulnerable industries of tourism, luxury retail, air travel, property and financial services, has been worst hit. Reports emerged of paralysed construction sites and expats abandoning their luxury cars at Dubai International airport. Scrutiny of human rights abuses endured by the huge workforce of migrant labourers has increased. Leaner times have brought a cultural backlash against Dubai’s hedonistic Western workers, with imprisonments for 'immorality’ and 'adultery’. Even Abu Dhabi, cushioned by its oil reserves and less headlong ethos, has suffered.

Jo Tatchell’s A Diamond in the Desert, and Dubai, by the former Associated Press correspondent Jim Krane, tell the stories of the rise and recent falter of these twin desert cities. Tatchell, who lived in Abu Dhabi as a child in the Seventies, has an unusual affection for it – or at least for the few traces of the old town she used to know, 'as enchanting and mutable as the dunes surrounding it’. A Diamond in the Desert is more travelogue than straightforward history, as she meanders between former drinking buddies and her father’s old business associates, trying to discover why the city is buying into culture, building branches of the Louvre, Guggenheim and Sorbonne, and creating national museums and arts centres.

Investors in dark over exposure of Saudi banks to troubled firms

Saudi banks booked more provisions for bad loans during the third quarter but an opaque veil of secrecy over the level of their exposure to troubled private firms is keeping investors guessing over their adequacy.

Stock exchange data showed that five Saudi banks booked more provisions for loan losses in the quarter, raising by at least 183 per cent their total amount this year compared to the first nine months of 2008.

The provisions had been widely expected amid concerns over the solvency levels of heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Brother (Ahab) which are at the centre of an estimated $22 billion (Dh80.7bn) debt implosion.

Saudi Stocks Rise as Quarterly Results Fuel Bets on More Gains

Saudi Arabian stocks rose, led by petrochemicals companies as improved third-quarter results bolstered speculation of further gains and oil prices remained above $80 a barrel.

Saudi Basic Industries Corp., the world’s largest petrochemicals maker known as Sabic, and National Industrialization Co., the Saudi petrochemical maker known as Tasnee, increased more than 1 percent.

The Tadawul All Share Index advanced 0.8 percent to 6,568.47, bringing the rally from this year’s low on March 9 to 59 percent. Sabic reported quarterly profit on Oct. 18 that beat analysts’ estimates on better global demand and product pricing, while Tasnee said net income climbed 58 percent on higher sales of chemicals.

Istithmar CEO Jackson Tells CNBC He Won’t ‘Abandon the Ship’

Istithmar World PJSC Chief Executive Officer David Jackson, speaking to CNBC, said he won’t “abandon the ship” right now.

Jackson told the financial news channel that the Dubai government-owned investment company will keep honoring its financial obligations and that its portfolio is “in good shape.” Jackson said no one is putting lots of cash to work right now.END

Without region-wide credit bureau, expect more Gulf corporate implosions

A pan-GCC body to exchange information on consumer and corporate debt is necessary to protect banks from borrowers with poor credit histories, analysts and bankers say.

“When you have a fragmented credit environment like the one we have in the GCC, it makes sense to have a central bureau, both from underwriting and enforcement perspectives,” said Khalid Howladar, a senior credit officer at Moody’s Investors Service in Dubai.

“This ensures a clearer picture of the borrower’s risk.”
Such a body, analysts and bankers say, can help ease tight credit conditions in the GCC, once banks are able to check the creditworthiness of a prospective borrower.

DIB bad loans will not halt expansion

Dubai Islamic Bank (DIB) posted a 35 per cent drop in profits to Dh1.12 billion (US$305 million) for the first nine months of the year because of rising provisions against bad loans but is pressing ahead with expansion plans.

Banks in the Emirates have been forced to write off increasing amounts to bad loans because of the recession and decline in property prices, but they have so far avoided the widespread bankruptcies associated with subprime lending in more developed markets.

DIB’s provisions of Dh403m in the nine months to September were consistent with the bank’s “prudent and conservative approach”, the lender said in a statement.

Saudi banks book more provisions

Saudi banks booked more provisions for bad loans during the third quarter but a veil of secrecy over the level of their exposure to troubled private firms is keeping investors guessing over their adequacy.

Stock exchange data showed that five Saudi banks booked more provisions for loan losses in the quarter, raising by at least 183 percent their total amount this year compared to the first nine months of 2008.

The provisions had been widely expected amid concerns over the solvency levels of heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros which are at the centre of an estimated $22 billion debt implosion.

Saturday, 24 October 2009

FT.com / Columnists / Lunch with the FT - Lunch with the FT: David Swensen

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Dubai Islamic Bank Q3 profit falls 31 pct, UAE Banks, Banking


Dubai Islamic Bank Q3 profit falls 31 pct, UAE Banks, Banking & Investment - Maktoob Business


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THE MARKET IS OVERVALUED BY 40% (Re-post from 2:1 blogs I follow)

This excellent post from Neil Hume at Ft Alphaville points out some analysis from Andrew Smithers at Smithers & Co. Smithers believes the market is grossly overvalued:

As we have remarked before, valid approaches to value are disliked by many practitioners as they get in the way of business. As is inherently likely, and as a glance at Chart 1 will confirm, the stock market has been underpriced around 50% of the time. Those who sell shares would rather it were cheap 100% of the time and therefore prefer invalid metrics. The ones used vary from time to time, as those employed are restricted to those which currently give the desired answer that “stocks are cheap”.

As the valid measures of the US market show that it is currently around 40% overvalued, some ingenuity is needed to claim otherwise. The EPS for the past 12 months on the S&P 500 is $7.51 so, with the index at 1071, it is selling at a trailing PE of 142. This is far higher than it has ever been before, as the previous end month record is a PE of 47. But current multiples are no guide to value; when depressed, or elevated, they need to be adjusted to their cyclical norm