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Monday, 19 October 2009

Dubai To Meet Investors As Bid To Tackle $80Bln Debt Unfolds

Dubai will crank up efforts this week to tackle its $80 billion debt pile with senior officials heading to Asia to meet potential investors amid reports that one of its most indebted companies has repaid a $1.2 billion bond ahead of schedule.

Top officials from Dubai's Department of Finance will meet fixed income and Islamic investors in Hong Kong, Singapore, London, Dubai and Frankfurt starting Thursday ahead of possibly selling more debt this year, according an invitation sent to bankers and seen by Zawya Dow Jones Monday.

An external spokesman for the department said the roadshows are part of "ongoing investor communication" but bankers suspect the meetings could be an early sign that Dubai may be preparing to issue the second half of its $20 billion bond program launched in February to support its economy and embattled companies.

"This will be the first time investors hear the Dubai story from officials post-crisis," Abdul Kadir Hussain, chief executive of Mashreq Capital told Zawya Dow Jones. "How this story is received will determine how successful Dubai will be over the next three to five years."

ANALYSIS-Dubai debt move, words not enough to assure investors

Dubai's move to repay and restructure some of its $80 billion debt and words of confidence from policymakers may not be enough to convince sceptical investors that the emirate could pay its bond obligations.

Successful debt restructuring is essential to prevent the debt-laden Dubai -- already bailed out by the federal government once -- from defaulting and cutting off overseas financing channels for the emirate whose 6-year oil boom burst last year, causing a big crash in the property market.

Property developer Nakheel, part of state-owned conglomerate Dubai World, has repaid a $1.2 billion securitised bond a month ahead of its maturity date, according to two bankers familiar with the deal.

TAQA to focus on existing portfolio

Abu Dhabi National Energy Co, better known as Taqa, will focus on growing its existing portfolio of assets after a two and a half-year spending spree, signaling a change in the state-backed company's short-term strategy, Taqa's new chief said Monday.

"I think our short-term focus has changed," said managing director Carl Sheldon, who serves in the newly-created position as chief of Taqa since former chief executive Peter Barker-Homek announced his resignation Friday.

"Our focus will shift away from acquisitions and more towards growth of our existing portfolio," Sheldon told analysts on a conference call.

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Dubai's Nakheel pays off $1.2 bln securitisation -report

Dubai property developer Nakheel has repaid a $1.2 billion securitised bond a month ahead of its maturity date, a magazine reported on Monday.
London-based MEED said on its website the state-owned developer, which has a $3.52 billion Islamic bond maturing in December, had made the repayment on Oct. 15.
The magazine did not say how it got the information.
The securitisation was due to mature on November 15 and had been financed by Emirates NBD, Mashreqbank, Noor Islamic Bank and Samba Financial Group.
Investors 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 -- one of seven members of the UAE federation -- and its state-linked firms have outstanding debt of about $80 billion, much of it incurred during a drive that saw Dubai expand activities in logistics, financial services, property and luxury retail and tourism.
Nakheel was not immediately available to comment.END

Abu Dhabi power project wins $2.15 bln deal

Abu Dhabi has sealed a $2.15 billion long-term financing deal for its Shuweihat 2 water and power project, signalling the return of appetite for regional project finance, officials and bankers said on Monday.

The 22-year financing for the project by Abu Dhabi Water & Electricity Authority (ADWEA) from a consortium of 15 regional and international banks is the biggest financing deal in the region this year.

The Japan Bank for International Cooperation (JBIC) committed half of the financing, while National Bank of Abu Dhabi is the only bank from the United Arab Emirates that is part of the deal.

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U.A.E. Ministry Completes Purchase of Emirates Industrial Bank

The United Arab Emirates’ Ministry of Finance bought 49 percent of Emirates Industrial Bank from 13 entities, according to a ministry statement today.

This adds to the 51 percent already owned by the government and completes the buyout of the bank, the statement said.END

Dubai to Meet With Traditional and Islamic Bond Investors

The Government of Dubai plans to meet with fixed income and Islamic investors in Asia, the U.A.E. and Europe starting Oct. 22, according to a banker involved in the transaction.

Dubai Islamic Bank PJSC, Mitsubishi UFJ Securities International, Standard Chartered Plc and UBS AG are arranging the meetings, the banker said.END

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Gulf finances

The Gulf region is not expected to tip back into growth until next year, but hints of a return to the good times are already evident in oil-rich Abu Dhabi. Plans for the emirate’s first-ever Formula One Grand Prix next month include a weekend of red-carpet events, complete with an opening-night concert by BeyoncĂ©. The contrast with Dubai couldn’t be starker: as Abu Dhabi shows off its party-planning skills, its resource-poor neighbour remains focused on its tattered finances.

An expected $10bn sovereign bond issue will be an important barometer of sentiment as Dubai attempts to right itself. Official numbers are scarce, but Standard & Poor’s estimates that the collapse of the boom of 2003-2007 has left Dubai and its state-backed companies with $80bn-$90bn of debt. Of that, about $50bn, equivalent to 70 per cent of Dubai’s yearly output, will come due in the next three years.

Healthier companies, such as ports operator DP World, will be able to make payments from their own cash flows as recovery takes hold. Other debt will be rolled over. But with at most $3bn-$4bn remaining in the emergency fund set up in the wake of an initial $10bn debt-raising backed by Abu Dhabi in February, there is little room to cover much beyond a $3.5bn debt payment due in December from Nakheel, a stricken developer of luxury resorts.

Few doubt that Dubai will raise the $10bn. Abu Dhabi has little to gain from a financial basket case in its own backyard. The question is whether the private investors who helped power Dubai’s services and property boom can be tempted to take part. Fears over Dubai’s credit worthiness are easing: spreads on Dubai’s 5-year debt have fallen to about 300 basis points, from more than 1,000 in January. Abu Dhabi, whose five-year debt trades at 100bp above Libor, has sold $13bn of debt this year without much fuss. But investors may be less keen on an economy that lacks Abu Dhabi’s cushion of 8 per cent of the world’s known oil reserves.END
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Mideast investment cuts hit private equity

Middle East families and sovereign wealth funds are slashing their investments and demanding more favourable terms from private equity funds following the financial crisis.

The region has been a significant source of capital for the private equity industry in recent years but many investors are still suffering from the collapse in liquidity that followed the collapse of Lehman Brothers.

One private equity executive who recently finished raising a buy-out fund said: "The one area where we have not raised any money is the Middle East. The region shut down 12 months ago."

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Gulf SWFs expected to gain $134bn this year

Sovereign wealth funds (SWFs) of Gulf oil producers lost about $90 billion (Dh330bn) in 2008, but are expected to gain nearly $134bn this year following an improvement in crude prices, according to a key financial institution.

From nearly $724bn at the end of 2007, the combined assets of the four major SWFs in the GCC shrank to about $634bn at the end of 2008 because of losses suffered from the global financial turmoil, said the Washington-based International Institute of Finance (IIF).

By the end of 2009, the assets of Abu Dhabi Investment Authority (Adia), Kuwaiti Investment Authority (KIA), Qatari investment Authority (QIA) and Oman Reserve Fund (ORF) are projected to swell to about $768bn, IIF said in a study on the GCC economies, sent to Emirates Business yesterday.

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Former minister's retrial in fraud case begins

The retrial of a former minister accused of committing fraud when he took over an IT company has begun at the Court of Appeal.

Also in the dock were SH, an American, and BM, an Indian, who are accused of fraudulently helping the ex-minister, KBF, to obtain a 51 per cent stake in the company after his partner died. All three deny the charges.

In February the former minister was jailed for two years after being found guilty of fraud by the Court of First Instance. SH and BM were sentenced to two years followed by deportation.

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Gulf private equity firms switch from buyouts to lending

Private equity firms are shifting their focus to providing the capital to help companies grow, notably in the Gulf, as financing for the headline-grabbing buyouts of recent years dries up.

“Some firms were riding the credit bubble and not thinking about creating value,” says Antoine Drean, the chairman and chief executive of Triago, a French private equity firm that does business in the region. “Now that credit bubble is gone.”

Only two years ago, loans to buy stakes in private companies were easy to get. When the financial crisis struck last year, however, all kinds of financial firms suddenly found themselves unable to raise cash for deals. The bank loan market imploded and investors started to shun the high-yield bonds that were once a cornerstone of buyout financing.

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Emaar may cancel Burj Dubai towers

Emaar could shelve plans to build 13 high-rise buildings earmarked for the site of the world’s tallest tower in Dubai after investors transferred their down payments to other projects.

The developer of the US$20 billion (Dh73.45bn) Downtown Burj Dubai project has allowed buyers since the start of the year to transfer their down payments on the buildings to other projects on the secondary market after sales dried up.

However, brokers report that buying and selling of credit on the towers has now come to a virtual standstill. Emaar did not say when a decision would be made.

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For Etisalat, foreign markets look full of promise

After losing 80,000 customers in the three months to June, Etisalat has defied expectations by increasing its customer base by 180,000 in the past quarter.

This growth not only marks out telecommunications as one of the few industries still on a growth path as the national economy contracts, but also suggests the worst-case scenarios of population decline need revisiting. The results reinforce the view that as consumers cut spending on luxuries big and small, they keep on making calls, sending texts and surfing the web, making telecoms immune to the downturn.

Etisalat’s profitability is threatened less by macroeconomics than it is by du, its two-and-a-half-year-old competitor.

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