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Sunday, 25 October 2009

Dubai unveils $6.5 bln borrowing; CDS near 1-yr low (Complete article)

The government of Dubai is set to launch a fresh borrowing programme worth $6.5 billion in its latest effort to consolidate its huge debt and further spend on infrastructure for the emirate's struggling economy.

The latest programme, due to be finalised in the next few days at the end of its roadshow, comes as the cost of insuring Dubai's debt falls towards a recent one-year low.

This brightens the prospect for the Dubai government which is in the middle of restructuring some of its $80 billion debt owned together with its state-owned firms.

Bankers, who attended the roadshows in Abu Dhabi and Dubai, told Reuters the government had launched a $4 billion euros ($6 billion) medium term note programme and a $2.5 billion Islamic bond, or sukuk, used for general corporate activities, including infrastructure.

"The meeting was full. They seem to be saying everything is going okay. These concerns (over Dubai's ability to restructure debt) seem to be ironed out," a senior banker who attended the meeting told Reuters on Sunday.

The Dubai government has about $19.7 billion of direct debt borrowing, one of the bankers said, citing the roadshow presentation, adding the funds would not be used for state-linked entities.

It will wrap up the roashow in London and Frankfurt on Tuesday after starting it in Hong Kong on Oct 22. A prospective international bond sale would be the first from the emirate in more than a year and comes after Dubai International Capital, an investment firm owned by the ruler of Dubai, launched earlier this month syndication for a $550 million loan.

Credit Default Swaps (CDS) prices for the five-year Dubai debt stood at 298.3 DUBA5YUSAC=MP at the end of Friday, close to a one-year low of 291 set last Tuesday.

"Compared to the past, the level of disclosure is more," said one of the bankers. "They also emphasised that as far as the Dubai government was concerned the UAE will back them and Dubai is an integral part of the UAE."

Dubai, one of the seven emirates in the country, propelled itself into the spotlight as a tourism hub during a six-year oil-fuelled boom, but the downturn rocked its foundations based on excess lending and a transient expatriate population.

Investors -- often starved of information in a region known for its lack of transparency -- 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 has at least $4.5 billion to restructure over the next two months, including a $1 billion Islamic bond from the emirate's civil aviation department and the world's largest Islamic bond to date, a $3.5 billion issue, from property developer Nakheel. ($1=.6664 euros) (Edsiting by Mike Nesbit)

Bahrain's AUB Q3 profit falls 45 pct on provisions

Ahli United Bank AUBB.BH (AUB), Bahrain's largest lender by market value, posted a 44.9 percent drop in third-quarter profit on higher loan provisions.

The bank said net profit came in at $43.5 million for the three months to Sept. 30. The lender booked $68.14 million in provisions during the third quarter, up from only $10.2 million in the year-earlier quarter.

AUB had increased provisions on its Saudi corporate loan portfolio to 75 percent from 65 percent during the second quarter, it said in a statement on Sunday.

Kuwait Gulf Bank Q3 profit hit by loan provisions

Kuwait's Gulf Bank (GBKK.KW) said bad loans would weigh on profits through mid-2010 on Sunday after it used all of the 42 million dinars ($147.1 million) of operating profit from the third quarter as provisions.

The bank did not publish a figure for net loss or net profit for the third quarter ending Sept. 30.

"The bank decided to take aggressive provisioning against its non-performing loans and credit facilities, particularly the regional portfolio, transferring all its operating profit to the existing provisions," the lender's Chief Executive Michel Accad said in the statement.

Dubai Government Sets Up $6.5 Billion Medium-Term Note Program

The Dubai government set up a $6.5 billion program to sell medium-term notes as the emirate plans its first international bond sale since June 2008, according to two investors who attended a marketing meeting in Dubai today.

The sale of Islamic bonds and those that don’t comply with Muslim banking rules may take place as soon as next week, said the investors who didn’t want to be identified as the meetings are private. The sheikhdom is targeting investors in the Middle East, Asia and Europe. The offering is separate from a $10 billion fund-raising program, which is part of a $20 billion support fund that the Dubai government set up for state-related companies.

The bonds include a $4 billion euro-note program, according to a prospectus seen by Bloomberg. Dubai also established a $2.5 billion program to sell Islamic bonds, or sukuk, according to the two investors.

FT.com / FTfm / Investment Strategy - Attractions of emerging markets hard to ignore

FT.com / FTfm / Investment Strategy - Attractions of emerging markets hard to ignore

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United Arab Emirates Shares Gain on Earnings; Kuwait Declines

United Arab Emirates shares advanced as better-than-expected earnings from Emaar Properties PJSC and First Gulf Bank encouraged buying after three days of losses even as other regional markets fell.

Emaar, the most heavily weighted stock on Dubai’s benchmark index climbed the most in almost a week after posting net income that was almost double analysts’ forecasts. First Gulf gained for a second day after last week reporting a 9.4 percent profit increase. The Dubai Financial Market General Index climbed for the first time in four days, rising 0.9 percent to 2,263.10, its highest close since Oct. 19. Abu Dhabi’s measure added 0.9 percent.

“Companies are getting out of the rut slowly and at least earnings are mostly coming out in a positive direction,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi.

Kuwait's Global debtors onboard for restructuring

Kuwait's Global Investment House says most of its creditors have agreed to a restructuring plan, as the country's largest investment bank looks to resolve a $3 billion debt default.

Global said Sunday an "overwhelming majority" of its creditors have approved the terms of restructuring and a timeline for completing it has been proposed. It did not provide any further details.

Global had been meeting with creditors to restructure almost $3 billion in loans on which it had defaulted. It previously announced the restructuring plan, but reports surfaced that some creditors had raised concerns.

The global financial crisis has hit this small oil-rich state hard, mostly affecting investment banks.

In April, Global reported its first ever annual loss.END

Dubai Sets Up $4 Billion Euro Medium-Term Note Program

The Dubai government has set up a $4 billion euro medium-term note program and is meeting investors ahead of a sale, according to an offer document sent to investors and received by Bloomberg News today.END

Iran Investment Monthly-Oct09 Turquoise Partners (PDF)

Market Overview 2
In September, the Tehran Stock Exchange (TSE) had a
volatile month. Stocks of most commodity companies and
the Telecommunications Company of Iran (TCI) lost value,
while pharmaceutical and financial stocks rallied. The Iranian
OTC market was officially opened in this month.

Turquoise Iran Equity Investments 4
The Turquoise Iran Equity Investments portfolios did not
change very much in September. Portfolio One NAV lost
0.2% in value while Portfolio Two NAV gained 1.9%. This
section provides data and charts on the performance of the
portfolios.

Country Overview 6
The latest developments on Iran’s nuclear dossier will be
discussed in this section.

Economy 7
Iran’s natural gas industry, the latest inflation data and Iran
joining TRACECA will be covered in this section.

Islamic asset mgt needs products, distribution to thrive

The infant Islamic management industry lacks a large enough range of products and distribution channels to increase to challenge its conventional peers in catering to Muslim wealth, experts said.

The nascent $1 trillion Islamic finance industry is walking a fine line between replicating conventional products and establishing its own genuine products that adhere to Islam's prohibition of interest.

Asset management is seen as a sector where the industry could easily create products according to its own set of values, but it has not yet established the range of products to compete with conventional asset management.

A Diamond in the Desert by Jo Tatchell and Dubai by Jim Krane: review


Abu Dhabi, the capital of the United Arab Emirates, is a city of extraordinary numbers. Over the past 50 years, a ramshackle desert outpost has become, thanks to eight per cent of the world’s proven oil reserves, the richest thicket of skyscrapers on earth. Abu Dhabi has an estimated $1trn invested abroad and its 420,000 citizens, led by the Al Nahyan family, are worth an average of $17m each. Seventy-nine miles up the coast in Dubai, meanwhile, their cousins and rivals the Al Maktoums have created a city with the world’s tallest building, the Burj Dubai, and new archipelagos – including the celebrity-ridden Palm Jumeirah and World islands – dredged from the Persian Gulf. As Arab investors withdrew from American markets after 9/11, their money flooded into Abu Dhabi and Dubai. Their burgeoning sky and coastlines – and the recent plugging of gaps in shaky Western economies – are the result.

But in the global financial crisis, some, at least, of the wheels have come off the Emirati money machine. Dubai, reliant on the vulnerable industries of tourism, luxury retail, air travel, property and financial services, has been worst hit. Reports emerged of paralysed construction sites and expats abandoning their luxury cars at Dubai International airport. Scrutiny of human rights abuses endured by the huge workforce of migrant labourers has increased. Leaner times have brought a cultural backlash against Dubai’s hedonistic Western workers, with imprisonments for 'immorality’ and 'adultery’. Even Abu Dhabi, cushioned by its oil reserves and less headlong ethos, has suffered.

Jo Tatchell’s A Diamond in the Desert, and Dubai, by the former Associated Press correspondent Jim Krane, tell the stories of the rise and recent falter of these twin desert cities. Tatchell, who lived in Abu Dhabi as a child in the Seventies, has an unusual affection for it – or at least for the few traces of the old town she used to know, 'as enchanting and mutable as the dunes surrounding it’. A Diamond in the Desert is more travelogue than straightforward history, as she meanders between former drinking buddies and her father’s old business associates, trying to discover why the city is buying into culture, building branches of the Louvre, Guggenheim and Sorbonne, and creating national museums and arts centres.

Investors in dark over exposure of Saudi banks to troubled firms

Saudi banks booked more provisions for bad loans during the third quarter but an opaque veil of secrecy over the level of their exposure to troubled private firms is keeping investors guessing over their adequacy.

Stock exchange data showed that five Saudi banks booked more provisions for loan losses in the quarter, raising by at least 183 per cent their total amount this year compared to the first nine months of 2008.

The provisions had been widely expected amid concerns over the solvency levels of heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Brother (Ahab) which are at the centre of an estimated $22 billion (Dh80.7bn) debt implosion.

Saudi Stocks Rise as Quarterly Results Fuel Bets on More Gains

Saudi Arabian stocks rose, led by petrochemicals companies as improved third-quarter results bolstered speculation of further gains and oil prices remained above $80 a barrel.

Saudi Basic Industries Corp., the world’s largest petrochemicals maker known as Sabic, and National Industrialization Co., the Saudi petrochemical maker known as Tasnee, increased more than 1 percent.

The Tadawul All Share Index advanced 0.8 percent to 6,568.47, bringing the rally from this year’s low on March 9 to 59 percent. Sabic reported quarterly profit on Oct. 18 that beat analysts’ estimates on better global demand and product pricing, while Tasnee said net income climbed 58 percent on higher sales of chemicals.

Istithmar CEO Jackson Tells CNBC He Won’t ‘Abandon the Ship’

Istithmar World PJSC Chief Executive Officer David Jackson, speaking to CNBC, said he won’t “abandon the ship” right now.

Jackson told the financial news channel that the Dubai government-owned investment company will keep honoring its financial obligations and that its portfolio is “in good shape.” Jackson said no one is putting lots of cash to work right now.END

Without region-wide credit bureau, expect more Gulf corporate implosions

A pan-GCC body to exchange information on consumer and corporate debt is necessary to protect banks from borrowers with poor credit histories, analysts and bankers say.

“When you have a fragmented credit environment like the one we have in the GCC, it makes sense to have a central bureau, both from underwriting and enforcement perspectives,” said Khalid Howladar, a senior credit officer at Moody’s Investors Service in Dubai.

“This ensures a clearer picture of the borrower’s risk.”
Such a body, analysts and bankers say, can help ease tight credit conditions in the GCC, once banks are able to check the creditworthiness of a prospective borrower.

DIB bad loans will not halt expansion

Dubai Islamic Bank (DIB) posted a 35 per cent drop in profits to Dh1.12 billion (US$305 million) for the first nine months of the year because of rising provisions against bad loans but is pressing ahead with expansion plans.

Banks in the Emirates have been forced to write off increasing amounts to bad loans because of the recession and decline in property prices, but they have so far avoided the widespread bankruptcies associated with subprime lending in more developed markets.

DIB’s provisions of Dh403m in the nine months to September were consistent with the bank’s “prudent and conservative approach”, the lender said in a statement.

Saudi banks book more provisions

Saudi banks booked more provisions for bad loans during the third quarter but a veil of secrecy over the level of their exposure to troubled private firms is keeping investors guessing over their adequacy.

Stock exchange data showed that five Saudi banks booked more provisions for loan losses in the quarter, raising by at least 183 percent their total amount this year compared to the first nine months of 2008.

The provisions had been widely expected amid concerns over the solvency levels of heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros which are at the centre of an estimated $22 billion debt implosion.