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Tuesday, 9 June 2009

Standard and Poor's Gulf Cooperation Council Credit Survey 2009 (PDF 218 pages)

Bahrain Raises Islamic Bond Size, Tightens Pricing

Bahrain, the smallest oil producer among the six Gulf Arab states, raised the size of its Islamic bond to $750 million and tightened the pricing on its five-year note complying with Islam’s ban on interest, Algebra Capital Ltd. said.

The bond may be priced to yield about 340 basis points above similar maturity U.S. Treasuries, Mohieddine Kronfol, managing director at Algebra in Dubai, said in an interview today. Algebra, which manages a fund that is dedicated to Islamic bonds, is investing in the issue.

The yield on Bahrain’s Islamic bonds, also known as sukuk, compares with five-year conventional bonds sold by Abu Dhabi in April that were priced to yield 400 basis points over Treasuries at the time of sale. A basis point is 0.01 percentage point. A banker familiar with the Bahraini deal said yesterday the bond may be priced to yield about 350 basis points

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Abu Dhabi Investment Company rebrands as Invest AD

Abu Dhabi Investment Company has rebranded as Invest AD in a drive to attract institutional investors to opportunities in the Middle East and North Africa region. The firm has also launched four new equity funds that it hopes will receive commitments from foreign investors.

The firm was established in 1977 to invest on behalf of the Abu Dhabi authorities, but now is now now inviting institutional investors around the world to invest alongside the Abu Dhabi government.

“The region is often regarded purely as a source of capital. In fact, phenomenal investment opportunity can be found right here,” said Invest AD chairman, Khalifa M Al Kindi. “MENA should increasingly become a destination for capital to be deployed by astute fund managers.”

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Investcorp taps into cheap U.S. real estate

Bahrain-based investment bank Investcorp has acquired $170.9 million worth of mortgage loans in the United States to take advantage of low real estate prices, the company said on Tuesday.

The loans are secured by commercial property assets located in the United States and were purchased by the bank at a discounted rate, Investcorp said in a statement.

"This opportunity to invest, at favourable prices, in sound U.S. commercial real estate assets exists now for two reasons," Investcorp Managing Director Mazin al-Khatib said in the statement.

"The difficult economic environment is forcing sales. Overleveraged buyers are being forced to recapitalise, and lenders, who need to liquidate to address balance sheet issues, are being forced to sell outright," he added.END

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Saad goes on sale

According to traders the troubled Saudi conglomerate has offloaded a large chunk of its 28.8 per cent holding in upmarket housebuilder Berkeley Homes on Tuesday morning - 16m shares at 701p through Citigroup. (In fact the shares were actually placed last night, but the business reported this morning).
They reckon the rest of the Berkeley stake will hit the market soon, albeit via another broker.

Shares in Berkeley are currently down 77p at 749p, a fall of 9.3 per cent.

Egypt (PDF 6 pages)

•Growth in the first half of FY09 slowed to 5.0%

•Balance of payments will be under pressure in this environment

•EGP basket trades within a +/- 2.5% trading band

The Middle East's Euro

The future of a planned currency union in the Persian Gulf did not look much clearer on Monday, despite the signing of a pact between Saudi Arabia, Qatar, Kuwait and Bahrain the day before.

Although the agreement seemed to definitively exclude the United Arab Emirates which pulled out of the proposed union in protest against the encroaching dominance of Saudi Arabia, it's unlikely that the Middle Eastern alliance would ever truly bar such a potentially significant economic partner. Still, the four-country union is unlikely to bend to the UAE's wishes, which would rather have the planned central bank located in Abu Dhabi, instead of the Saudi capital of Riyadh.

"The door isn't closed for the UAE," said Philippe Dauba-Pantanacce, an economist at Standard Chartered. "Then again, I'm almost certain that Saudi Arabia will not go back on its stance that the central bank should be located in Riyadh."

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Emirates says may slow down plane deliveries

Dubai-based Emirates airline may slow down deliveries of its plane orders from next year, its president said on Tuesday.

"We are looking at slowing some...maybe next year," Tim Clark told Reuters on the sidelines of the International Air Transport Association annual meeting in Kuala Lumpur.

Emirates, which has a $55 billion order book for planes from Boeing and Airbus, expects to receive about 10 planes a year.

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GCC – Rising again (PDF)

GCC is once again at the forefront of the MENA economic engine

•Market metrics have recently shown a marked shift in sentiment

•Upward trend in oil prices will rapidly offset announced budget deficits

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SBI cashes in on $15 billion trade between UAE and India

State Bank of India (SBI) is a relatively newcomer to the UAE, having set up its office in Dubai International Financial Centre (DIFC) only last year. Although it has received a Category 1 licence from the Dubai Financial Services Authority (DFSA) earlier this year, its market for asset creation remains limited because it is not allowed to take deposits from the UAE.

Due to the dearth of deposits from domestic markets, the bank is forced to source 90 per cent of its financing from the international markets. But despite operating in a restrictive environment, India's largest bank is still expecting a double-digit growth year on year and is currently planning its expansion strategies in the Gulf.

"SBI definitely has an advantage in doing this because there is a lot of trade happening between the UAE and India, could be in the range of $15 billion (Dh55bn)," AJ Vidyasagar, Chief Executive Officer of State Bank of India (SBI) at DIFC told Emirates Business. "For this financial year, we have achieved our 12-month loan and deposit targets beginning in the first month itself."

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Saudi fund sees rise in demand as lending falls

The Saudi Industrial Development Fund, a government lender with $5.3 billion (Dh19.4bn) in capital, said demand has increased this year from companies seeking project finance as the global credit crisis constrains bank lending.

"This year we will have more in terms of the number of loans but not the amounts," Mohammed Dobaib, acting director general of the Riyadh-based fund, said in an interview.

"Some successful traders used to go to banks without coming to us. Now, it is different. The banks are being more conservative."

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Oman to cut reliance on oil exports, plans to diversify

MuscatImage via Wikipedia

Oman plans to drastically reduce its reliance on oil exports and double its income from industrial activities in the coming decade as the Gulf strives to diversify away from crude export revenues.

The non-Opec oil exporter aims to reduce the contribution of the oil sector to its gross domestic product to nine per cent by 2020 from 41.5 per cent in 2007, according to an official planning document from the Ministry of National Economy.

"The economy would no longer be oil-reliant in 2020. It is envisaged to be a diversified economy with higher levels of savings and investment," the document said.

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ENBD's non-performing retail loans increase by double digits

Emirates NBD's (ENBD) non-performing retail loans (NPLs) have increased by double digits in the past six months. The bank has also seen an increase in fraudulent activities, primarily in documentation, a senior bank executive said.

"For the retail business, NPLs have increased by double digits in the past six months especially from unsecured business such as personal loans and credit cards," Suvo Sarkar, Executive Vice-President and General Manager, Retail Banking, Emirates NBD told Emirates Business.

"NPLs have been inching up in the past couple of quarters and we expect that to be the case in the next two quarters, but are expecting it to be better by the end of the year. However, we are very much in control. We have increased collection efforts and have made our lending conservative," he said

Sarkar said the region's largest bank in terms of assets is planning to aggressively penetrate the retail market with a goal of achieving 25 per cent share in the next three years. Currently, about 80 per cent of its loan book is made up of the corporate segment.END

Qatar wealth fund in talks over Porsche stake

Porsche SEImage via Wikipedia

Porsche is in advanced talks about selling a large stake to the Gulf state of Qatar that could ease the sports car maker’s financial pain and turn the tables in its feud with Volkswagen.

Wendelin Wiedeking, Porsche’s chief executive, is talking to the Qatar Investment Authority (QIA) about taking a stake of up to 25 per cent in its holding company, people familiar with the talks said.

They said QIA was examining Porsche’s books and a deal could be announced within weeks.

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Hyder unlikely to recoup all funds from Nakheel

Hyder Consulting Plc, a UK engineering-design company, said it may only recoup 70 per cent of the money owed by Dubai developer Nakheel PJSC, as a lack of finance hurts construction in Dubai and the Arabian Gulf.

The company is owed about £1 million (Dh5.8 million) by the state-owned developer of Dubai's palm tree-shaped islands, for which it expects to receive "about 70 pence in the pound," Chief Financial Officer Russell Down said at a press conference in London yesterday.

"It doesn't put us off Dubai," Chief Executive Officer Ivor Catto said at the press conference. "There's been a very good time in Dubai, but now there's a recession."

The company has been working in the Middle East for 45 years, Catto said.

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Qatar’s housing drought eases

After years of acute housing shortage, the supply-demand gap is narrowing in Qatar, said the property consultant Landmark Advisory in a survey.

“The situation is already reversing,” said Jesse Downs, the director of research and advisory services. “The assumption was that Qatar’s booming economy, based on petroleum exports, had attracted large inflows of expatriate professionals. However, this assumption does not bear close scrutiny.”

According to the Landmark’s Qatar Real Estate Report for the second quarter, Qatar’s petroleum industry employs only 5 per cent of all expatriates, but accounts for roughly 70 per cent of GDP. “Since a large portion of construction workers live in labour compounds, they do not contribute to demand for individual housing units. So, it is misleading to assume that Qatar’s recent population growth is matched by a comparable increase in residential demand.”

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Buyers walk as Ivory Tower work halts

Foundation work on the long-delayed Ivory Tower in Dubai, which began six months ago, has again reached a standstill.

Hundreds of buyers are walking away from their investment in the Sokook Investment Group’s project, which is already three years overdue.

“Why should we pay for an imaginary tower?” asked one investor who declined to be named.

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Saad denies asset freeze

Saad Group company logoImage via Wikipedia

Saad Group, the company owned by the Saudi billionaire Maan al Sanea, Monday denied reports of a freeze on its assets in Kuwait and said its accounts in Saudi Arabia were “stable”.

The embattled company said it was close to announcing its proposal for a co-ordinating bank and a “top four” accounting firm to represent the interests of counter-parties in its debt restructuring plan.

The statement follows the appointment of the business law firm Lawrence Graham as legal adviser and BDO Corporate Finance as financial adviser.

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Rivals vent fury on Gulf airlines

Struggling airlines from North America and Asia complained about losing market share to Gulf carriers Monday, amid accusations of predatory pricing and capacity dumping as the industry experiences its worst slump on record.

But the region’s carriers rejected their rivals’ complaints, made at an international conference in the Malaysian capital, saying they were generating new demand by opening up previously untapped markets.

Executives from Air Canada and Air New Zealand attacked the “Big Three” carriers from the Gulf – Emirates Airline, Etihad Airways and Qatar Airways – which have built their airlines on a go-it-alone strategy, rather than joining alliances with established players.

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Dubai buses may be privatised

Transport chiefs are considering privatising Dubai’s public bus system.

Mohammed al Hashimi, the director of the planning and business development department at the Roads and Transport Authority’s (RTA) public transport agency, said privatising the bus network was under review.

Mr al Hashimi said the RTA wanted to get the public transport system correct before any decisions were made. The main objective of the RTA according to Mr al Hashimi was first to provide a service for the city.

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Dubai luxury good sales slump 45 percent in downturn

Sales of luxury goods in Dubai have dropped about 45 percent since the global economic crisis prompted local shoppers to tighten their purse strings and tourists to rethink spending sprees, a top retailer said.

Speaking to the Reuters Global Luxury Summit in Dubai, Tony Jashanmal, a director of the 90-year old Jashanmal Group of Companies, said the worst of the first real downturn in the region's retail sector in about 17 years had passed.

But the repercussions would linger as retailers scramble to sell excess stock and shoppers from recession-hit countries like Russia, who tended to frequent Dubai malls, stay home as they seek ways to weather the crisis.

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Tamweel disputes media report on funding needs

Dubai mortgage lender Tamweel PJSC TAML.DU rejected a media report saying it needed $1.55 billion in funds to restart its financing operations, but did not say how much it did need.

"We do not agree with either the analysis of the conclusions of this media report," Tamweel said in a statement on Monday.

Tamweel and rival Amlak Finance PJSC AMLK.DU are being restructured by the government and could be merged as they suffer from a sharp downturn in residential real estate prices in their home market.

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Questions About a Desert Village

The Middle East property boom has produced more than its share of dream-spinners and deal makers, whose brash attitudes eventually dwarfed the villas and towers they promised to build.

Few, however, have made as much of a splash as Sheik Sulaiman al-Fahim, a television personality from Abu Dhabi whose flashy lifestyle and acquisitive strikes into Britain’s premier soccer league have overshadowed his work as a real estate developer.

Now, as he is about to complete his biggest deal ever — the purchase of the Portsmouth soccer team in Britain — Mr. Fahim finds himself at the center of a controversy over persistent delays involving one of his development projects, Hydra Village.

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Troubled banks swing spotlight on to Bahrain

When Saad Group, a troubled Saudi company, blamed its woes on a liquidity squeeze and singled out recent events affecting the Bahraini banking sector, it met with a furious response from the kingdom’s regulator.

In a rapid turnround the conglomerate, owned by Maan al-Sanea, issued a fresh statement the next day that lavished praise on the central bank, saying its “prudent oversight reflects the commitment to firm governance in Bahrain”.

The troubles of Mr Sanea, who has had his personal accounts frozen in Saudi Arabia, as well as those of Algosaibi group, another Saudi conglomerate, have rattled bankers and investors across the Gulf. It has also swung the spotlight on to Bahrain (pictured above), which claims to have the Gulf’s oldest and best regulated financial centre and has long been an offshore base for banks doing business in Saudi Arabia.

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Abu Dhabi replaces editor

The National newspaper, which is owned by the Abu Dhabi government, on Monday appointed a new editor-in-chief, barely a year after its high-profile launch.

The newspaper said that Hassan Fattah is to replace Martin Newland, the former editor of The Daily Telegraph who was brought in to set up the English-language broadsheet. Mr Newland will be The National’s new editorial director responsible for expanding the paper’s brand across a “range of platforms and services,” according to the Abu Dhabi Media Company, the owner.

Mr Fattah, 39, who was involved in setting up a newspaper in Iraq after the US-led invasion of that country and previously worked for the New York Times, was Mr Newland’s deputy when The National launched.

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