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Tuesday, 29 September 2009

Moody's cuts Bahrain's Investcorp on financials

Ratings agency Moody's downgraded Bahrain-based Investcorp INVB.BH (INVBq.L) on Tuesday, citing the fragility of its financial condition and the tough environment for private equity deals to generate income.

Moody's said in a statement it had downgraded the long-term deposit rating of the Bahrain- and London-listed investment house to Ba2 from Ba1, its financial strength rating to D from D+ and assigned a negative outlook to the ratings.

It said Investcorp's financial strength was limited by modest equity levels compared with its risk assets, a high concentration of its private equity investments and little prospects for the company to improve its earnings from fee-generating private equity transactions.

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Revisiting a Trade: Long GCC Banks « Alpha Dinar

Revisiting a Trade: Long GCC Banks « Alpha Dinar

Qatar May Increase Stake in VW After Porsche Merger

Qatar wants to increase its stake in Volkswagen AG after the German carmaker completes its takeover of Porsche SE, an executive at the emirate’s investment agency board said.

“If they give me the opportunity, I will,” Hussain Al- Abdulla, a Qatar Investment Authority board member, said today in an interview at the Doha Business Roundtable, when asked whether the emirate plans to expand its holding after the German manufacturers combine.

Volkswagen, Europe’s biggest automaker, rose to a 12-day high in Frankfurt trading. Qatar already has 10 percent of the voting rights in Porsche, the maker of the 911 sports car, and options that will give the Persian Gulf state 17 percent of Wolfsburg-based Volkswagen as part of the carmakers’ merger agreement last month.

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Gulf Governments Don’t Want Bank Bailout Precedent

Gulf banks should bear responsibility for their lending practices and governments must not create a precedent with bail outs, Oman’s central bank governor said.

“Nobody should expect that governments are going to bail out the borrowers,” Hamud bin Sangur al-Zadjali told reporters at a news conference in Abu Dhabi today following a meeting of Gulf central bank governors that he chaired. “Banks need to take responsibility for their decisions.”

Saudi Arabia’s Saad and Algosaibi groups, which are restructuring their debt after defaulting on payments, have borrowed at least $15.7 billion from more than 80 regional and international banks, including Paris-based BNP Paribas SA, New York-based Citigroup Inc. and Arab Bank Plc in Amman, Jordan, according to documents provided by lenders.

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Rothschild busiest in Mideast M&A: study

Rothschild ROT.UL has been the Middle East's busiest advisor on mergers and acquisitions so far in 2009, data shows, underlining the growth potential for independent investment banks in the region.

Rothschild, which has worked on deals worth $15.4 billion so far this year, precedes Deutsche Bank AG (DBKGn.DE) and Morgan Stanley MS.M in league tables set out in a study released by Thomson Reuters (TRI.TO)(TRI.N) on Tuesday.

Despite investment banking activity having fallen to pre-boom year levels in the Middle East, Rothschild in the past year has doubled the number bankers working from Dubai to around 20, a strategy that is paying off.

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2nd UPDATE: DFSA Says Saad Grp Unit License May Be Withdrawn

The Dubai Financial Services Authority said Tuesday that it has been informed by liquidators that SAAD Financial Advisory Services may have its license withdrawn.

The regulators said in an emailed statement that "LA Investments Limited (LAIL) has been placed into liquidation in the U.K. LAIL is the parent company of SAAD Financial Advisory Services Limited (SAAD), which is a DFSA regulated firm.

The statement adds that "LAIL was put into a members' voluntary solvent liquidation on Sept. 21, with Stephen John Akers and Gareth Rutt Morris of Grant Thornton UK LLP acting as the liquidators."

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Thomson Reuters launches Middle East investment banking league tables

With money managers and investors shunning volatile stocks in the financial crisis, debt issues and restructuring have taken the lead in the Middle East financial markets, according to the Thomson Reuters investment banking league tables for the region launched today.

“Thomson Reuters has a long history of pioneering in the region since opening its office in Alexandria in 1865,” said Basil Moftah, Managing Director of Thomson Reuters, Middle East and Africa. “We are pleased to be launching these dedicated rankings in the Middle East. For the financial community, these well-respected league tables serve as an independent authority on the investment banking marketplace.”

Moftah was speaking as Thomson Reuters released the first in a new series of quarterly analytical reviews which examine the performance of the Middle East investment banking industry in the region’s debt and equity capital markets, both conventional and Islamic.

Also read:
Equity, M&A, loans tank across Mideast in '09

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Arab Stocks May Outperform Developed Markets, EFG’s CEO Says

Arab stocks may outperform developed markets in the next 12 months because their economies have greater catalysts for growth as the credit crisis eases, the chief executive officer of EFG-Hermes Holding SAE said.

“Arab markets have less problems,” Yasser El-Mallawany, CEO of Egypt’s biggest investment bank, said in an interview at his office in Cairo yesterday. “They have a growing population and oil prices are still at $70, which is quite supportive for the Gulf. America still has consumer credit issues and Europe has the appreciation of the euro.”

The MSCI World Index of developed markets has jumped 21 percent this year compared with a 26 percent gain in the MSCI Arabian Markets Index. Egypt’s benchmark EGX30 Index has been the best performer among Arab markets, with a 47 percent surge. The MSCI Emerging Market Index has rallied 58 percent so far in 2009. Crude oil prices have gained 47 percent.

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Return to monetary union unlikely

The UAE is unlikely to return to the planned GCC monetary union, the Central Bank Governor Sultan al Suwaidi said yesterday.

He said he did not see a compromise deal that would allow the country to rejoin proposals for the formation of a single currency for the GCC.

“We have certain concerns, certain issues, with the GCC monetary union so therefore we don’t want to act as a stumbling block to this,” Mr al Suwaidi said while attending the annual meeting of the Council of Governors of Arab Central Banks and Monetary Agencies in Abu Dhabi.

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Turnaround firm is in talks with Dubai entities

Alvarez and Marsal, the turnaround specialist overseeing the bankruptcy of Lehman Brothers, is negotiating with several Dubai-owned entities about mandates for organisational restructuring.

The firm is also in advanced talks with one major government-related investment company, said Antonio M Alvarez, the firm’s managing director. “We have had various discussions in the past six months and government-related entities are among them.”

Many Dubai Government-owned companies with large debt are merging operations in response to the global economic slowdown.

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Taqa aims to boost exploration

The Abu Dhabi National Energy Company (Taqa) is hoping to expand its operations in finding new oil and gas deposits over the next two years, the company’s chief executive, Peter Barker-Homek, said yesterday.

“Eventually we’ll start getting into much more exploration,” he added.

That would start with more investment in the exploration side of the company’s oil and gas business over the next 24 months, he said.

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Dutch gas partners seek out of UAE deal

Dutch oil and gas company Dyas and Canada's largest energy firm PetroCanada are looking to sell their stakes in one of Europe's largest gas storage projects, three people familiar with the matter said.

The two companies want to exit the scheme, located in Bergemeer north of Amsterdam, because of disagreements with partner Abu Dhabi National Energy Company over how to take the project forward, one banking source said.

"TAQA would be the obvious buyer of their stakes, as they can develop the project from here," the source said. Pre-emption rights in such cases are often part of Dutch oil and gas agreements.

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Dubai freezone office lease rates dive 70 pct

Office lease rates in Dubai’s new freezones have fallen more than 70 percent in some parts and the decline will continue, hurt by sluggish demand and new supply coming on board during a recession.

Leasing rates in the new freezone of Jumeirah Lake Towers (JLT) have fallen between 57 percent and 71 percent from the third quarter of last year until now, a study by real estate consultancy CB Richard Ellis Middle East released on Tuesday showed.

Office space in the JLT freezone has more than doubled to 5.2 million square feet in the same time from 2.5 million.

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Wanted: experts to tackle global insolvency rush

There are too few turnaround specialists in the world to cope with a surge in the numbers of companies that need restructuring after the credit crisis, an insolvency expert told the Reuters Restructuring Summit.

"There are 408 practitioners in 11 of the United States' trading partners, 5 of them have 7 between them...Saudi Arabia, for example, has none," said Nick Hood, senior partner of Begbies Traynor (BEG.L: Quote, Profile, Research, Stock Buzz), insolvency specialists.

He pointed to Saad Group SAADG.UL, the Saudi Arabian conglomerate at the center of a multibillion dollar debt restructuring.

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Arab Central Bankers Seek Greater Cooperation

Arab central-bank governors called for greater governance of banks struggling with hefty exposure to troubled businesses in their meeting Monday.

"The next phase will require closer cooperation between central banks and monetary institutions," United Arab Emirates central-bank chief, Sultan bin Nasser Al Suwaidi, said in his opening speech.

Calls for greater coordination and regulation among Middle Eastern countries formed the main theme for Monday's meeting, echoing similar calls from the meeting of the Group of 20 leading economies last week.

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Delayed bad debts hinder UAE banks

Banks in the United Arab Emirates will have to contend with mounting bad debts into next year, which will eat into the profits and the capital adequacy ratios of local institutions, according to Fitch, the credit ratings agency.

Local banks remain well capitalised – largely thanks to robust federal government support – say Fitch analysts in a report yesterday. However, the financial crisis hit the region with a lag and the economic impact has yet to be fully felt by the local industry, the agency says.

The combined net income of the eight largest national banks in the UAE reached Dh8.8bn in the first half of the year, and the overall non-performing loan ratio remains low at 2 per cent.

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Saad Group reaches deal with Saudi creditors

The governor of Saudi Arabia’s central bank confirmed on Monday that Saad Group, the troubled conglomerate owned by billionaire Maan al Sanea, had reached an agreement to settle debts with Saudi creditors.

“This is an agreement between the creditors and the borrower, and my understanding is they have agreed to settle,” Muhammad al-Jasser, governor of the Saudi Arabian Monetary Agency, told reporters.

Saad Group and another prominent Saudi company facing financial difficulties, Ahmad Hamad Algosaibi and Brothers (AHAB), are estimated to owe dozens of regional and international banks about $20bn.

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Shuaa gathers itself after rollercoaster

Shuaa Capital, the United Arab Emirates’ largest investment bank, has a history that mirrors the rollercoaster ride experienced by Dubai, its home base, over the past 10 years.

Formed in 1979 as an investment company called Arabian General Investment Corporation, it was set up to encourage intra-Arab investment. Then, at the turn of the millennium, Shuaa developed into a fully fledged brokerage and finally investment bank.

But just as Dubai’s frenetic growth was achieved without the steadying hand of regulation and co-ordination, as is becoming clear from its current travails, so Shuaa’s star has fallen. From a peak of almost Dh9 in June 2008, its shares fell to below Dh1 this year before rallying to about Dh2 now.

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