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Thursday, 26 March 2009

MGM Mirage plans to finish CityCenter

Las Vegas Gaming Wire

LAS VEGAS, Nevada -- A day after being accused by its joint venture partner of mismanaging the $9.1 billion CityCenter development, MGM Mirage said a lawsuit filed by Dubai World was "completely without merit" and the casino operator plans to complete the Strip development.

MGM Mirage attempted to quell nervous shareholders' fears after Dubai World, the investment arm of the Persian Gulf state, filed suit Sunday in Delaware Chancery Court asking for unspecified damages and seeking to be relieved of its obligations under the companies' August 2007 joint venture agreement.

MGM Mirage Senior Vice President of Public Affairs Alan Feldman Tuesday e-mailed a statement from the company before trading opened on the New York Stock Exchange and tried to deflect Dubai World's claims that question the viability of CityCenter.

"Dubai World is well aware of our written commitment to meet our funding obligations and that MGM Mirage has available cash to satisfy those obligations," Feldman said in the statement. "MGM Mirage is ready, willing and able to fund its share of the costs to complete CityCenter, including a required payment this week."

During MGM Mirage's fourth-quarter earnings conference call March 17, the company said it had $600 million in cash on hand. Three days later, the company collected another $600 million as the initial payment on the $775 million sale of Treasure Island to Phil Ruffin.

Geithner’s game plan (Click to access full text)

Sovereign wealth funds prefer equities (Complete article)

Sovereign wealth funds are overwhelmingly exposed to equities and fixed income, according to the latest data from Preqin, a research firm which focuses on alternative asset classes.

SWFs’ appetite for Western assets - notably financial institutions, is on the wane, with many funds turning to domestic and regional investments. (FT Alphaville can’t help but wonder how Prince Al-Waleed bin Talal feels about that Citigroup investment these days…)
But despite recent losses, the aggregate total assets of these funds have continued to increase, the London-based Prequin said. Assets under management currently stand at $3,220bn, a six per cent increase from the same period a year ago and a 59 per cent rise compared with 2007. Of course, there’s a hedge:

This growth is primarily due to the reclassification of China’s $312bn SAFE Investment Company as a SWF following its purchase of a number of public and private equity interests in 2008. Khazakstan has also incepted a new fund - the $29bn Samruk Kazyna National Welfare Fund over the course of 2008, while Korea is one of the existing funds that has boosted the assets of its SWF over the past year. These funds have counteracted the effects of declining total assets of some SWFs that have suffered as a result of poor investment returns in the wake of the global economic downturn.

Compliance, Moody’s style

The complicity of the rating agencies in the current financial mess is well documented. One of the major protestations from the agencies in response to various accusations, however, has been their robust internal checks and balances, which, clients and regulators are assured, make sure everything is done by the book.
Today though, another nail in the coffin of that particular trope. From the WSJ:

A former Moody’s Investors Service credit analyst has sued the company, alleging he was fired after his call on a bond rating was trumped by a manager’s concern about how much the bond issuer was paying Moody’s.

Onto specifics:

In his complaint, Mr. Bienstock says that on Dec. 4, 2007, he presented Express Scripts debt to a Moody’s committee for an upgrade from a speculative Ba1 to an investment-grade rating of Baa3, based on improved company performance. Mr. Bienstock alleges that the committee voted 5-2 for the upgrade, but his supervisor, Patrick Finnegan, the ratings committee chairman and then director of Moody’s corporate-finance group, called for a revote saying “Express Scripts doesn’t pay us,” and “they don’t visit us and they don’t deserve our upgrade.”

Mr. Bienstock said he protested, but the committee voted again, this time 6-1 against the upgrade.

Middle Eastern Wealth Funds Seek Mining Investments (Update1)

Sovereign wealth funds from the Middle East, and Japanese and Korean companies are seeking mining acquisitions and investments after asset values dropped, competing with Chinese companies, UBS AG said.

“This is the time to do that because asset values are low,” Paul Knight, managing director and joint global head of metals and mining with UBS, said today. “The Koreans are looking at acquisitions, and the Japanese to some extent.”

China last month agreed to invest $22 billion in commodity producers including Rio Tinto Group as indebted companies seek funds after the global recession and credit crunch spurred a collapse in metal prices and lending. Sovereign wealth funds may be diversifying after losing more than $60 billion since the onset of the credit crisis after investing in financial stocks.

NBK, Kuwait Finance, Commercial Bank Rated New ‘Sell’ at UBS

National Bank of Kuwait, the emirate’s biggest lender, Kuwait Finance House, and Commercial Bank of Kuwait were rated “sell” in new coverage at UBS AG.

“Falling asset prices spread like a sickness throughout an economy, damaging the banking system,” Dubai-based analyst Stephen Andrews wrote in a note to clients today. “The Kuwaiti banks face significant headwinds over the next 12 to 18 months.”

The analyst set a share-price estimate for NBK and Kuwait Finance House of 900 fils and for Commercial Bank of 650 fils.END

Cabinet approves draft bill on boosting Kuwait''s financial stability (End)

Iran-Armenia oil pipeline construction work begins

Armenian Minister of Energy and Natural Resources Armen Movsisyan said Iran-Armenia oil pipeline construction work has begun According to the report of Armenian news agency "Arminfo", Movsisyan in a press conference in Yerevan, capital of Armenia, on Tuesday declared beginning of construction work of the pipeline and said the pipeline will transfer oil products such as gasoline and gas from Tabriz refinery to Armenia.

Iran and Armenia reached a primary agreement on construction of a 300-kilometer pipeline from Iranian northwestern city of Tabriz to the border city of Mughri, in Armenia in 2007.

Movsisyan estimated the construction expenditure about 240 million dollars which will be paid by Iran in the form of a loan.

Property Prices' Biggest Declines in Hong Kong, London and Dubai

The Citi Private Bank report commissioned from Knight Frank provides a fascinating snap-shot of global property markets, and relative performance in the fourth quarter of 2008.

The biggest falls in residential property prices were in Hong Kong (-26.8%), Home Counties (-19.4%, the region surrounding London), London (-16.9%) and Dubai (-19.1%).

Annual gains
But the fall in the fourth quarter was insufficient to totally wipe out annual property price gains in three cities: Moscow (+13.1%), Shanghai (+5.2%) and also Dubai (+10.8%). Aside from Dubai the other property markets that slumped in the fourth quarter were all down for the year: Hong Kong (-24.5%), Home Counties (-10.2%) and London (-9.4%).

Dubai, Rome, Charlotte and San Francisco airports grew the fastest in 2008

Dubai and Rome have the world's two fastest growing airports, while Charlotte, N.C., and San Francisco lead the U.S. airports.

How do we know this? Because Airports Council International has released its preliminary passenger traffic numbers for the 30 largest airports worldwide, and that's what the numbers show.

On the other end of the scale, Chicago O'Hare saw its numbers drop the most, followed in order by Bangkok, Thailand, Las Vegas, Phoenix and Dallas/Ft Worth.

We're talking about percentages in those numbers.

If you take the actual numbers, the fastest growers in order are Dubai, Rome, Beijing, Denver and Charlotte, N.C. The ones that saw their passenger numbers decline the most were, in order, Chicago O'Hare, Las Vegas, Dallas/Fort Worth, Bangkok and Los Angeles.

Time is right for regulator

There probably has never been a better time to be a regulator. While some have been accused of sleeping on the job, others are making the most of the new appetite for greater regulation.

Paul Koster is the new chief executive of the Dubai Financial Services Authority (DFSA) in his office at the Dubai International Finance Centre (DIFC). He is a Dutchman with a wealth of experience, ranging from his time as the commissioner of the Autoriteit Financiƫle Markten (Netherlands Authority for the Financial Markets), executive vice president of Royal Philips Electronics and chief compliance officer at the Amsterdam Stock Exchange.

He has carried out a number of senior finance functions in his earlier career, having trained as an accountant with Arthur Andersen.

Government considers US stimulus model

The Government is considering new options to help aid the nation’s financial sector, according to the UAE governor of the Central Bank, Sultan bin Nasswer al Suwaidi.

He said the Central Bank is working with the Ministry of Finance to formulate new policies, similar to those that have been enacted in the United States and the United Kingdom.

“There will be some arrangements to help the banks [decrease their loan to deposit ratios], but there a lot of issues. There is not only one solution for the whole thing. It is not only a cash injection that you need to do. You need to do multiple things, like they did in the US or the UK,” Mr Suwaidi said.

Dubai’s flying buttresses

It is hard to believe that an airport that averaged 712 flights a day last year could have come from such humble beginnings half a century ago.

But in 1959, Sheikh Rashid bin Saeed Al Maktoum, the then Ruler of Dubai, ordered a strip of compacted sand be established along Dubai Creek to serve aeroplanes in need of refuelling during the “Horseshoe line”. The route was operated by British Overseas Air Co (BOAC), a precursor to British Airways, on the route from southern Africa via the Gulf to Sydney.

The airport was opened a year later and in 1968, the customs department hired Sultan al Joker who has been there for the past 41 years and is its longest-serving official. Mr al Joker was 18 years old and newly married when he became an inspector.

Crisis will not end in 2010: AMF

The international financial crisis will not end this year or in 2010 – and no one can predict when it will, said the Arab Monetary Fund (AMF).

"Nobody in the world can predict when the crisis will end and how far its repercussions will reach," said Dr Hazem Elbeblawi, an advisor to the fund.

Asked by Emirates Business about the extent of the losses suffered by the region as a result of the meltdown – said by some commentators to have reached $1.5 trillion (Dh5.5trn) – he replied: "There is no accurate figure and no Arab research institution has confirmed a figure.

Gulf SWFs to keep a low profile after slowdown

Heavy losses caused by the collapse of global markets will ally with the crash in crude prices to force Gulf state funds to slow down their investment push into the West and other countries, a key Saudi investment fund has said.

NCB Capital, an offshoot of the Saudi National Commercial Bank, said the sovereign wealth funds (SWFs) in the six-nation Gulf Co-operation Council (GCC) have received a severe blow from the global economic crisis as the bulk of their assets are based abroad.

It said the Abu Dhabi Investment Authority (Adia), ranked as the world's largest SWF, and other government funds in the region, could have suffered as much as 30 per cent loss.

Adih eyes US, Europe distressed assets

Abu Dhabi Investment House (Adih) aims to capitalise on opportunities in distressed assets in the US and European countries, said its Deputy Chief Executive Officer Fawaz Al Jowder.

In an interview with CNBC Arabiya, he said the company has extended its operations to North Africa including Morocco and Tunisia, and Southeast Asia.

Al Jowder added that the company has also made significant investments in funds such as the India Entertainment City, part of the Qatar Entertainment City.

Ipic completes acquisition of 70% of MAN Ferrostaal

The International Petroleum Investment Company (Ipic), owned by the Government of Abu Dhabi, has completed the acquisition of 70 per cent stake in Germany's auto maker MAN Ferrostaal.

Ipic has thus become the new majority owner of MAN Ferrostaal.

Ipic has acquired 70 per cent of the shares with 30 per cent retained by MAN shareholders. The price for 100 per cent of the shares will amount to about 700 million euros (Dh3.4 billion), depending on the outcome of a mutual option that MAN and Ipic have agreed on for the sale and purchase of the remaining shares. The transaction includes all business activities and subsidiaries.

MAN said in a statement that it had closed the sale of a majority stake in its Ferrostaal services unit to Ipic for €490m.

DP World profit up 48%, revenue rises to $3.3bn

DP World, the global terminal operating arm of Dubai World, has started 2009 with a decline in consolidated throughput across its network, with an average slowdown of eight per cent registered in the first two months of the year.

Despite announcing strong results for 2008, company officials said the volume deceleration witnessed in the last quarter of 2008 had continued into early 2009 with no signs of easing in the foreseeable future. The company considers its current market valuation disappointing and will call a board meeting in the coming months to evaluate available options to address the situation.

The company results announced yesterday showed profit after tax for continuing operations rising by 48 per cent to $621 million (Dh2.28 billion), while revenue growth increased 20 per cent to $3.3bn.

No delay in GCC monetary union: Attiyah

Gulf oil producers yesterday denied reports that they have shelved plans to launch a monetary union by 2010 and said the issue would be discussed by their heads of state at a meeting in May.

Quoting officials from the Gulf Co-operation Council (GCC) yesterday, Reuters and other news reports said member countries have decided to extend the 2010 deadline for the world's second currency union.

Reacting to such reports, GCC Secretary-General Abdul Rahman Al Attiyah said the 2010deadline remains in force, according to the Saudi Arabic language daily Al Jazeera.

Lehman investors seek Central Bank help

UAE-based investors who have purchased investments linked to failed US investment bank Lehman Brothers from the National Bank of Fujairah (NBF), have asked the UAE Central Bank to urgently resolve the complaint they have filed against NBF.

Investors are seeking the Central Bank's help in a complete waiver of repayment of leverage (loans) offered by NBF and the money they have invested in Capital Protected Notes sold by NBF.

Investors cite that similar complaints lodged by investors against banks in Singapore, Hong Kong and Europe have already been settled with waiver on the repayment of the leverage while in some cases banks have agreed to repay investors' money.

Emirates NBD open to government help

Chairman of Emirates NBD Ahmad Humaid Al Tayer on Wednesday admitted that accessing funding from the Dubai government or the federal government was an option to raise its capital base.

"All these banks worldwide are getting support from their governments. so if we get support from our government then that is normal," Al Tayer said. He said that any conditions for support had not yet been discussed.

The UAE Central Bank requires all banks to have a minimum capital adequacy ratio of 11 per cent by June 30, 2009, and of 12 per cent by June 30, 2010.

Egypt equities rally sparks wary optimism

The Egyptian bourse has been one of the hardest hit in the region by the global financial crisis, but in recent weeks the prices of bellwether shares have started to pick up. This has prompted cautious hopes that the market may have bottomed out.

Analysts report increased buying by foreign institutions interested in blue chips, including Orascom Telecom, Orascom Construction Industries and Ezz Steel Rebars.

“These have been the first solid moves up that we’ve seen across the board and that suggests we’ve turned a corner,” says Angus Blair, head of research at Beltone Financial, a regional investment bank. “It is unlikely that we will test the lows we have seen earlier.”

Loan worries weigh on UAE banks

If confirmation were needed of woes in the United Arab Emirates banking industry, Moody’s this month said it was considering downgrading the rating of HSBC Middle East, mainly due to the prospect of rising loan delinquencies in the UAE, its largest market.

HSBC Middle East said its charges for bad loans rose by five times to $280m last year because of a “significant” increase in consumer loan defaults, equivalent to about 1 per cent of the bank’s regional loan book.

The travails of UAE banks first emerged last year, when an exodus of international capital left an estimated $55bn hole in funding at local institutions, but the federal authorities acted swiftly to buttress the banking system. The central bank opened a Dh50bn ($13.6bn) credit facility, while the finance ministry said it would guarantee all deposits and interbank lending, and deposit up to Dh70bn with the banks.

Ras al-Khaimah mines a variety of seams

Ras al-Khaimah, the mountainous northern outpost of the United Arab Emirates, never had much oil, rather like Dubai, its more famous neighbour. But rather than basing its economy on trade, it chose to look underground for mineral wealth and to adopt an industrial strategy.

That has led to a large ceramics factory – RAK Ceramics – cement factories and quarrying in the Hajar mountains becoming the chosen vehicles for developing the emirate.

RAK Minerals & Mines Investments, a joint venture between RAK Ceramics and Trimex, an Indian minerals group, has taken that strategy international. The partners are investing in and developing raw materials for the industries that underpin the emirate’s fortunes.