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Thursday, 2 July 2009

Implied sovereign ratings: UK ranks below China

Data from CMA’s latest global sovereign credit risk report (H/T Alea).

The world’s safest sovereigns (implied by current CDS spreads run through CMA’s own proprietary rating model):

And the world’s riskiest:

The UK, readers might be interested, comes in at 18th (in terms of safety), with an implied CMA rating of AA+, one step below China, and one above Slovakia.

Whether the market is pricing efficiently or not, is the question.

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Dubai's 2nd $10B Bond May Be Backed By UAE Government-Source

The government of the United Arab Emirates may guarantee Dubai's second $10 billion bond to help boost confidence in the struggling emirate, according to a government official familiar with the matter.

"It will be the first time an emirate's bond has been backed by the federal government," the Dubai official, who is involved with the bond told Zawya Dow Jones.

Dubai is seeking federal support to help sell the bond to international banks who otherwise may be reluctant to buy the debt as the emirate continues to restructure its finances. The bond issue will be the first by Dubai backed by the federal government.

In February, Dubai's Department of Finance issued the first half of the bond program totaling $20 billion, all of which was subscribed to by the U.A.E. central bank.

A Department of Finance spokesperson declined to comment.

The bond program is aimed at raising much-needed funding for Dubai to help refinance debt of government-affiliated companies hit by the global financial crisis.

Dubai is one of seven emirates that make up the U.A.E. Most of the country's oil wealth comes from Abu Dhabi, which holds 90% of its crude reserves.

Federal government backing for Dubai's second $10 billion tranche is seen as a key confidence building measure and is likely to boost investors' appetite and help the emirate secure more attractive pricing.

"Investors continue to require a large premium to carry the risk of Dubai-based entities," Mohamed Jaber, an economist at Morgan Stanley said in a note Monday.

While part of the drive behind tapping financial markets is aimed at boosting confidence, the central bank may also be too hamstrung to commit the cash, a person familiar with the matter said.

The bond, which will be issued later this year, is expected by analysts to hit the market before real-estate firm Nakheel, the developer of Dubai's iconic palm islands, needs to refinance a $3.5 billion bond in December.

Like many of its neighbors, Dubai wants to spend its way out of the global economic crisis. Its 2009 budget will see the emirate's first-ever deficit of 4.2 billion U.A.E. dirhams ($1.14 billion), with government spending up 42% on the previous year.

The bond program will support government spending plans and the private sector at a time when loans from international banks have dried up as global lenders have become too nervous to lend. At the same time, local banks are grappling with a large loan-to-deposit gap of about AED90 billion. The bonds are being used to help fill in the gaps.

"We expect this to be issued before the end of 2009 however it really depends on when it is required," said Ali Ibrahim Mohammed, the deputy director general at Dubai's Department of Economic Development. "The response is sure to be positive and will again raise confidence in the market."

He declined to comment on federal backing for the bond. The U.A.E.'s finance ministry also declined to comment.

In the second-quarter this year, Gulf companies and governments raised about $9 billion through bonds as they grapple with an oil price slump from an average $99 a barrel in 2008.END

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Saudi Stock Market Weekly Report - 1-July-2009

Anonymous Iran Green Brief #15 (July 01) (Re-post)


1. There have been unconfirmed reports of a protest in Tehran today. There were reports of clashes in Rasht that could be partially confirmed. Clashes broke out when police tried to disperse people who were mourning dead protesters. A doctor and two nurses were badly beaten in Loghman Hospital in Tehran after they tried to stop security forces from arresting an injured protester from the facility. A tweet source talked to a Basiji in Tehran today. According to the source, the Basiji claimed that he was working for Islam, but hoped that he wouldn’t be forced to quell protests again.

2. Protests are being planned for tomorrow - although none could be fully confirmed. A number of Iranian women who’ve formed a quasi-group called Mourning Mothers have announced that they will gather at Laleh Park on Saturday to mourn the dead. Reports from Tehran suggest that shops are being closed earlier than usual. Several sources claimed that the city is in a virtual state of an unofficial curfew.

Political Statements

3. Mousavi today released his 9th statement since the elections. He said that, “No opportunity to illuminate the extent of this lie and its historic repercussions should be lost and that the liars and cheats are only sheltering behind the law to impose their intentions.” He added that it was his and “all Iranians’ revolutionary responsibility to not let the blood of thousands of martyrs to have been in vain.” He continued to say, “It’s our historic mission to continue our protest and not abandon the cause of regaining people's rights.” He questioned the government’s legitimacy and said that he no longer believed the government to be lawful – a sentiment already recognized by the majority of Iranians. He called upon the Government’s Elite to help expose the election fraud by releasing evidence and documents currently in their possession.

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GCC's financial sector recovery slows in June - Al Mal

The recovery in the Gulf’s finance sector lost its impetus in June as regional loan growth stalled and uncertainty over exposure to stressed regional conglomerates Al Gosaibi and Saad Group weighed on banking stocks, Al Mal Capital said on Wednesday.

The UAE’s pledge to guarantee bank bonds may not alleviate the liquidity concerns expressed by the country’s lenders, the Dubai-based investment bank said in a note to investors.

“We are doubtful about the impact on kick starting loan growth as the banks are reticent to extend loans into a fundamentally deteriorating economic environment,” a team of analysts wrote.

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BFX set to woo family-owned businesses (Interview)

Bahrain Financial Exchange (BFX) seeks to target family-owned businesses by providing them an opportunity to raise funding by offloading a stake less than 50 per cent, thereby retaining management control. The exchange hopes to have a hundred members in the first year of operations after its scheduled launch in "the early part of the first quarter of 2010", BFX Director Arshad Khan told Emirates Business. The fledgling bourse is confident of attracting listings once the marketing drive begins, he said.

Will Bahrain Financial Exchange be launched on time?

We're still on time and as promised to the market, BFX will be operational in the first quarter of next year. Considering the progress we made, it should be early part of Q1. We have finalised a lot of things including product structure, guideline document, internal rules and regulations of exchange, membership structure, conditions for listings, rules of trading and clearing, etc.

UAE to be part of gas forum: Qatar

The UAE has agreed to join a newly created forum comprising the world's largest gas exporters in a group that will not be involved in pricing, Qatar's Minister of Energy and Industry said yesterday.

Abdullah bin Hamad Al Attiyah said the UAE attended Tuesday's meeting of gas exporters in Doha as a "guest" while the Netherlands would join as an observer. "Regarding joining the forum by the UAE, the process is now under way. The UAE has participated in the meeting as a guest and they are planning to join as full members of the forum," Attiyah told local Qatari newspapers.

At their first meeting in Doha, the foreign ministers of the gas forum elected Attiyah as its chairman but they deferred the appointment of a secretary-general to their next meeting in Doha in December.

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Aramex extends foreign ownership up to 49%

Aramex announced that foreign investors, including all those who are not nationals of the UAE or the Gulf Co-operation Council states, may own up to 49 per cent of the company's share capital.

This step follows ratification by the UAE Ministry of Economy of a resolution approved at a recent Aramex Extraordinary General Meeting, stating that share ownership by GCC and UAE nationals should be treated at par.

Collectively, their ownership of Aramex shares should not be less than 51 per cent at any time. Aramex has got high levels of foreign ownership of its shares.END

TDIC sells $1b in bonds to fund its projects

Abu Dhabi-based Tourism Development and Investment Company (TDIC) said on Wednesday it had sold $1 billion of five-year bonds under the $3 billion Global Medium Term Note programme to fund projects.

"The issue of notes attracted substantial interest from global investors, with a total order book exceeding $6 billion from approximately 300 investors," TDIC, which manages the development of real estate assets held by the Abu Dhabi Government, said in a statement.

"The final allocation of TDIC's $1 billion five-year issue was priced at 390 bps over US Treasuries."

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UAE banks exposed to Saudi firms

More than 10 banks in the UAE are involved in syndicated loans worth US$767.5 million (Dh2.81 billion) to two troubled Saudi conglomerates, according to a document obtained by The National.

The total loan exposure of 88 global banks to the two firms, the Saad and Al Ghosaibi groups, amounts to just over $7.4bn, according to the document circulating among some bankers. The document reveals in more precise detail than before the exposures of banks to a series of large loans made to Saad Group, Ahmad Hamad Al Ghosaibi & Brothers, and their subsidiaries.

They include a $2.8bn loan to Saad Investments, a $2.75bn loan to Saad Group, a $300m term loan to Saad Trading and $610m in two loans to the Bahrain-based Awal Bank, which is controlled by Saad.

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flydubai secures Boeing finance deal

flydubai has secured a US$320 million (Dh1.17bn) financing deal for four Boeing 737s from GE Capital Aviation Services (GECAS), giving the month-old budget airline a financial boost amid tight conditions for credit within the air travel industry.

The aeroplanes will be delivered between now and December to fuel the airline’s rapid network expansion.
The airline, owned by the Dubai Government, launched its first route on June 1 and plans to operate 15 routes by the end of the year, amid forecasts that airlines worldwide will lose $9bn this year because of the economic downturn.

Ghaith al Ghaith, the chief executive of flydubai, said its first month’s performance was above expectations, but he did not give figures.

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Iraq seeks plan B after auction

The location of Baghdad within Iraq.Image via Wikipedia

Iraq said yesterday its state oil companies would manage and exploit two gasfields and possibly one oilfield that failed to attract acceptable bids from foreign companies in the country’s first post-war oil and gas licensing round.

Baghdad also rejected further offers it received after the close on Tuesday of a televised auction of service contracts for work on six of the country’s biggest oilfields and the two gasfields.

“The offers from the foreign companies were rejected by the government,” said Ali al Dabbagh, a government spokesman. “If they want the oilfields they have to match the prices offered by the ministry of oil.”

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Taqa cuts ties with S&P over changes to rating method

Abu Dhabi National Energy Company (Taqa) Wednesday said it had severed ties with the ratings agency Standard & Poor’s (S&P) because of changes in the way the agency evaluates the creditworthiness of government-related companies.

The change led S&P to put Taqa and Nakilat, a gas shipping company based in Qatar, on watch for possible ratings downgrades.

Taqa, which is majority-owned by the Abu Dhabi Government and has 27.95 per cent of its shares listed on the Abu Dhabi Securities Exchange, still holds an “Aa2” rating from Moody’s Investor Services, one of the agency’s strongest marks.

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Iraq rejects foreign oil deals

Iraq on Wednesday said it has rejected further offers from foreign companies to work in the country's oil and gas sector and pledged that some sites will instead be solely exploited by state-owned firms.

The cabinet made its decision after reviewing new offers from international bidders, government spokesman Ali al-Dabbagh told AFP, a day after being widely snubbed by energy companies unhappy about the terms on offer.

"The offers from the foreign companies were rejected by the government," Dabbagh said.

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Qatar eyeing bigger stake in Porsche/VW deal

Porsche Automobil Holding SE might enter a deal under which it would sell the majority of its options on Volkswagen AG shares to Qatar and divest a smaller stake in itself, as initially planned, to the Arab emirate, a person familiar with the matter told the Dow Jones Newswires on Wednesday.

If successful, the crucial deal to shore up Porsche's balance sheet could include a capital increase of around 5 billion euros and additional financial support from Qatar through a credit or guarantees, the person said.

On Monday, Porsche confirmed it received an offer from state-owned Qatar Investment Authority over a capital injection, just hours after it rebuffed an offer from Volkswagen.

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Evening Standard, London, Letter From Dubai Column

Abu Dhabi is taking the green shoots of recovery a step further, winning the race to host the International Renewable Energy Agency (Irena). Abu Dhabi hopes it will add fuel to its Masdar project -- a $15 billion (£9 billion) green city designed by Sir Norman Foster.

On the surface, it seems an absurd paradox. Abu Dhabi is home to about 8 percent of the world's oil, is a major oil and gas producer, and capital of the UAE -- a staunch member of oil cartel Opec. Irena, set up this year, strives to promote a "rapid transition" away from hydrocarbons. Surely this is the turkey voting for Christmas?

UAE foreign minister Sheikh Abdullah bin Zayed al Nahyan says not. His government backed Abu Dhabi's effort to host Irena, fighting off Germany and Austria. A sovereign wealth fund has pledged to build a zero-carbon headquarters for the body, which will be given rent-free.

Saudi Arabian bourse feels watchdog’s bite

It has happened twice. In February 2006 and last October, millions of Saudis saw their savings evaporate overnight as the Saudi bourse, the Arab world’s biggest, crashed.

As the index plummeted, anger rose among retail investors who had ploughed family savings and loans into the market hoping for a quick gain. They accused the government of turning a blind eye to “big sharks” who manipulated the market.

But, in what analysts say is a move towards greater transparency, the Capital Market Authority, the market regulator, took a rare step late last month and fined two Saudi investors SR100,000 ($26,673) each for insider trading.

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Saudis award 9,000km border security contract

Central Command Responsibility MapImage by Image Editor via Flickr

Saudi Arabia on Wednesday moved to bolster security along its borders with Iraq and Yemen with the award of a contract to build a 9,000km security system.

The project – awarded to EADS, the European aerospace and defence group – is also intended to stem the flow of illegal immigrants into the country.

In March, EADS and Al-Rasheed Trading Contracting, its Saudi partner, were awarded a contract to construct a fence along Saudi Arabia’s 900km border with Iraq. Wednesday’s announcement adds a further 8,000km of security fence to the project.

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