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Tuesday, 27 October 2009

FACTBOX-Gulf banks' exposure to Saudi groups (Latest available disclosure from individual banks)

Saudi family conglomerates Saad Group
[SAADG.UL] and Ahmad Hamad Algosaibi & Bros are restructuring
debt, as are their Bahrain-based banking units, in some of the
worst fallout from the credit crisis to hit the Gulf region.
Following are the latest exposure levels to Saad and
Algosaibi according to the banks themselves, sources close to
the banks or to media reports.

** new or updated entries

ADCB has $609 million in exposure, according to a debt
prospectus published by the bank and dated Sept. 17.

Abu Dhabi Islamic Bank said Sept. 30 it had booked 836
million dirhams ($228 million) provisions as of June 30 but
declined to specify how much was related to Saad and Algosaibi.

** First Gulf Bank on Oct. 21 said it had $104 million in
exposures and expects to make further provisions until the end
of 2010.

Commercial Bank International on Sept 30 said it never
granted any credit facilities or loans to Saad and Algosaibi.

National Bank of Abu Dhabi reiterated on Sept. 30 its July
announcement that it had $7.5 million in exposure to Algosaibi
and $3.4 million in exposure to Saad.

Invest Bank said on Sept. 30 it had no exposure.
Union National said it had no exposure to Saad, but $60.5
million to Algosaibi. The Algosaibi exposure is in the form of a
joint loan of $20.8 million and trust receipts amounting to
$39.7 million.

National Bank of Fujairah has exposure to Algosaibi of $10.2
million and $15.2 million outstanding with Saad's Bahrain unit,
Awal Bank, it said on Sept 30. IIt has taken provisions of $3.3
million for Algosaibi and $6.5 million for Awal as of Aug. 31.

Sharjah Islamic Bank had $15 million exposure to Algosaibi,
it said on Sept. 30, and has taken provisions of 50 percent.

National Bank of Umm Al Qaiwain said its net exposure to the
two groups amounted to $12.5 million.

Rakbank reiterated on Sept. 30 its July announcement that it
had no exposure to the groups.

United Arab Bank, an affiliate of Commercial Bank of Qatar
COMB.QA, said Sept. 30 it has no exposure.

BANK OF SHARJAH BOS.AD "no exposure"
The bank, based in the emirate of Sharjah, has said it had
no exposure.

MASHREQ MASB.DU $400 million
Dubai-based Mashreqbank said on Sept. 16 it had $400 million
in exposure to Algosaibi and related parties.

EMIRATES NBD ENBD.DU "has exposure"
Emirates NBD has exposure, but it is not material, its chief
executive said in July.

Dubai Islamic Bank said it had no exposure.

Arab Emirates said it had no exposure.

COMMERCIAL BANK OF KUWAIT (CBKK.KW) $119 million -report
Commercial Bank of Kuwait gave about $119 million in loans
to the troubled Saad Group, according to a newspaper report.

AL AHLI BANK (ABKK.KW) below $30 mln
Al Ahli Bank of Kuwait has exposure of less than $30 million
to Saad Group, but has no exposure to Algosaibi, Deputy Chief
General Manager Abdulla Alsumait, told Reuters.

NBK has exposure of about $10 million, the bank's chief
executive said in July.

GULF BANK (GBKK.KW) "has exposure"
** The bank said Oct. 25 bad loans would weigh on profits
through mid-2010. Its exposure to the groups could be contained
and dealt with, state news agency KUNA cited the bank's chief
executive as saying on Sept. 28.

KFH, in which the country's sovereign wealth fund owns a
24.1 percent stake, said in June it had minimal exposure to the
two Saudi groups.

BANK MUSCAT BMAO.OM $171 million
Bank Muscat, Oman's biggest bank, said on June 11 that Saad
and Algosaibi owed the lender and its unit in Bahrain a combined
66 million rials ($171 million).

National Bank of Oman said it had a limited interbank
exposure totalling 6.5 million rials ($16.89 million) to The
International Banking Corporation and Awal Bank in Bahrain.

BANK DHOFAR BDOF.OM $10.39 million
Oman's Bank Dhofar said it had around 4 million rials
($10.39 million) in exposure to the two Saudi groups.

The bank said in June it did not have any exposure.

AHLI BANK ABOB.OM "no exposure"
Ahli Bank said it holds no exposure.

** Bahrain's biggest bank said on Oct. 25 it had increased the
provisions level it booked for its "impaired Saudi corprate
assets" to 75 percent during the third quarter from 65 percent
during the second quarter. It did not breakdown its exposure.

Shamil Bank, a unit of Bahrain-based Islamic lender Ithmaar,
has minor exposure to the two groups.

The bank has limited exposure to Algosaibi, al Sharq
newspaper reported in July, citing the lender's executive
general manager.

** Saudi Arabian banks have yet to announce exposure to the two
Saudi groups, but they booked higher unspecified provisions
against bad loans during the third quarter. [ID:nLO578403]

(Compiled by John Irish, Nicolas Parasie and Frederik
Richter; Editing by )

© Thomson Reuters 2009 All rights reserved

Dubai is super enough, thanks

Dubai has sufficient superlatives – record-setting landmarks unique in their size, cost or concept — to last it for the next decade – so enough already, says Deyaar CEO Markus Giebel.

“I endorse having the tallest building in the world, the first seven-star hotel in the world, the palm,” he says. “What I don’t endorse are attempts to now outdo these superlatives…they are going to last us the next 10 to 15 years.”

Dubai is home — amongst other attractions — to the world’s largest indoor ski slope, the world’s tallest tower, and the world’s first, albeit self-rated, seven-star hotel that also sports its own Rolls Royce fleet and helicopter landing platform. The global financial crisis brought a real estate boom in the emirate to a screeching halt, leading to a raft of new, hugely ambitious projects — including a 1-km high tower and the world’s largest mall – to be shelved or delayed.

Saudi bond market needs sovereign benchmark

The strength of Saudi Arabia's public finances should not prevent the government from issuing sovereign Islamic bond -- or sukuk -- which will be critical to the development of corporate sukuk issues, bankers said.

Kamal Mian, head of Saudi Hollandi Bank's Islamic banking unit, also said that any of Saudi Arabia's 130-plus listed firms can tap the sukuk market, but the high financial cost linked to ratings from international agencies makes bank funding "always cheaper."

"Rating is expensive ... The (sukuk) Saudi market needs a local rating agency," Mian told the Reuters Middle East Summit in Riyadh.


Dr. Robert Mabro, a senior adviser to OPEC, thinks oil prices are "divorced from the fundamentals" of the market.

I'm always a little jolted to hear OPEC say oil prices are too high. But major oil producers, particularly Saudi Arabia, actually don't want prices to climb too quickly right now. That would squelch any chance at a global economic recovery.

It would also mean billions of dollars of wasted investment for many of those countries. Consider Iraq, for example, which is planning a major expansion of its Rumaila oil field (in a joint venture with BP and CNPC). The project would nearly triple Rumaila's production to about 2.8 million barrels per day. But if there isn't enough demand in the world market to soak up that excess oil, the investment is a waste.

U.A.E. Stocks End Two-Day Rally as ADCB Net Drops; Kuwait Gains

United Arab Emirates shares fell for the first time in three days as Abu Dhabi Commercial Bank PJSC reported a drop in profit and on concern that gains earlier this week outpaced the prospects for earnings growth.

ADCB, the country’s third-biggest bank by assets, tumbled the most since January. Emaar Properties PJSC, the biggest real- estate developer in the U.A.E., ended a three-day rally. Emerging-market stocks dropped the most in seven weeks as raw- materials producers declined on lower commodity prices. Abu Dhabi’s index lost 0.7 percent to 3,145.4 and the Dubai Financial Market General Index fell 0.8 percent to 2,319.37. Dubai’s index rose 4.2 percent in the previous two days.

“Some of the more liquid large cap stocks were up between 3 and 6 percent yesterday, so a round of profit-taking was inevitable, especially with the international markets looking weaker,” said Ian Munro, head of equity research at Mac Capital Advisors in Dubai.

Aldar Properties Q3 profit plunges 43 pct

Abu Dhabi's Aldar Properties made a third-quarter net profit of 430 million dirhams ($117.1 million), down 43.4 percent from the previous quarter.

The emirate's largest developer by market capitalisation made a net profit of 759.50 million dirhams in the comparable quarter in 2008.

Aldar said on Tuesday it made a nine-month net profit of 1.57 billion dirhams down from 3.36 billion dirhams in the same period last year.

It did not give quarterly data which Reuters calculated based on previous statements.END

Qatar diverts LNG from U.S. to China

Qatar's oil minister said Tuesday that the Gulf sheikdom was diverting liquefied natural gas, or LNG, shipments to China from the U.S. as demand softens in North America.

Abdullah bin Hamed Al Attiyah told reporters that the gas-rich state, which plans to produce 77 million tons a year of LNG by September 2010, is in talks with China about long-term supply of the fuel.

China is increasingly competing for access to world energy to power an economy that's growing at a time when the U.S. continues to be weighed down by the global financial crisis hitting energy demand in North America.

Mashreq sees tough '10, rising loan defaults

UAE-based Mashreq bank expects 2010 to be a challenging year for business with increased likelihood of property loan defaults, a senior official said on Tuesday.

Douglas Beckett, head of retail banking, said the bank has been spared bad loans in the property sector this year, but has been hit by credit card and personal debt defaults.

“The property sector has not been a problem for us this year. We expect that we will see increased levels of challenge in our property portfolio next year,” he told Maktoob Business on the sidelines of a conference in Dubai.

UAE's ADCB Q3 profit nosedives 90 pct

Abu Dhabi Commercial Bank posted a 90 percent drop in third-quarter net profit, falling short of analysts' expectations, as the lender booked hefty provisions, sending its shares down over 8 percent.

ADCB, the sixth largest bank in the UAE by market value, posted a net profit of 44 million dirhams ($11.98 million) in the third quarter versus 447.6 million dirhams in the year earlier period, according to a statement on the bourse's website on Tuesday.

"The bank continued to set aside provisions to cover any probable loss in its loan portfolio and some investments which had a negative impact on the bank's results for Q3," Eissa Al Suwaidi, chairman of ADCB, said in a statement.

DP World sees tough Q4; CFO to join parent firm

Port operator DP World DPW.DI reported a 6-percent fall in third-quarter container volumes on Tuesday and said its 2009 results would be in line with market expectations despite a challenging fourth quarter ahead.

The firm also said its chief financial officer would step down at its December board meeting and join state-linked parent company Dubai World as group CFO, adding that no replacement had yet been found. [ID:nLR395474]

The decline in container volumes meant a 8 percent fall year on year for the nine months to Sept. 30, DP World said in a statement on the Nasdaq Dubai exchange website.

Dubai's bond plan likely to target $1 billion first

The government of Dubai's fresh borrowing program is likely to initially raise $1 billion through an Islamic bond to refinance the debt held by the aviation department, said the head of Emirates NBD Capital, which is involved in the program.

Chief Executive Suresh Kumar told Reuters on Tuesday that the first tranche, part of the $6.5 billion conventional and Islamic bond program launched last week, would set the benchmark for the rest and the pricing would have a spread of around 300 basis points.

"My sense is it will be focused on the Islamic certificate program to raise possibly $1 billion to be used to meet the maturity of the DCA (Department of Civil Aviation) sukuk," Kumar told the Reuters Investment Summit in Dubai.

Shuaa Saudi Arabia has secured 4 mandates

Shuaa Capital's SHUA.DU Saudi unit said on Tuesday it has secured four investment banking mandates and is sounding out up to nine further deals in the largest Arab economy.

"The four we have confirmed," Shuaa Saudi Arabia's Chief Executive Omar Jaroudi told the Reuters Middle East Investment Summit in Riyadh, declining to identify the firms.

Shuaa Saudi Arabia was advising one education firm, a retailer on separate merger and acquisition deals, one manufacturer on drawing a business plan and a real estate firm on a private placement, he said.

Dubai to seek investors in New York

Some of Dubai’s biggest listed companies will make presentations next week in New York to stoke investor interest as firms in the GCC mount a recovery from the financial crisis.

The road show, scheduled for next Monday and Tuesday, aims to bring together the management of firms listed on the Dubai Financial Market and NASDAQ Dubai with large US investors deploying capital overseas.

“These conferences allow direct contact between senior management and the professional investment community,” said Oliver Schutzmann, the head of investor relations at Shuaa Capital, one of the firms listed in Dubai that will take part in the presentations. “This is an excellent opportunity for institutional investors to get introduced to companies they perhaps haven’t met yet.”

Emirates NBD joins rush for bonds

Emirates NBD, the largest local lender by assets, is preparing to join the race to raise fresh funds and issue bonds as credit markets show signs of easing.

The disclosure comes after the bank surprised analysts with an unexpected 3 per cent increase in third-quarter profits, compared with the same period last year.

“This is an opportunity to test the market after it was closed for the last 18 months,” said Rick Pudner, the chief executive.

Al Gosaibis seek deal on debt

The embattled al Gosaibi family of Saudi Arabia has sought the help of the UAE Central Bank to broker a deal with lenders in the Emirates over the estimated US$3 billion (Dh11.01bn) of debt they are owed as a result of one of the Middle East’s biggest financial scandals.

A meeting between family representatives and Central Bank officials took place last week as part of the Saudi family’s plans for a “global” settlement of their debt problems, and was described as “very useful”, according to a source familiar with the discussions.

The move by the al Gosaibis represents an easing in the problems caused by their bitter dispute with Maan al Sanea, the billionaire head of Saad Group accused of defrauding them.

DIC's new loan has fat fees, little pieces (Re-post)

MEED is reporting further details of Dubai International Capital's new 2-year, $550 million syndicated loan.

As I suspected when bankers divulged that the loan had been secured last week, the new money is designed to refinance $600 million in loans. Bankers had told The National that those loans weren't due until November. But according to MEED, DIC paid them with a bridge loan in August. The new $550 million loan refinances that bridge loan. MEED says DIC is paying 4 percentage points over Libor, or about 4.28 per cent. But banks are also being rewarded with fees of up to 3 percent of the deal, making the overall borrowing cost over 7 per cent. This may have negative implications for the pricing of Dubai's new bonds, which judging from Dubai CDS prices could be priced below 4 per cent. Given that Dubai is unrated, and that the uncertainty surrounding Dubai's use of its bailout funds, however, and lack of transparency from Dubai Inc. companies about their own restructuring, that rate may end up being much higher. If this were the case, however, it does stand to reason that the CDS spread would also be much higher.

When DIC borrowed the $600 million in October, 2006, it paid only 0.8 percentage points over Libor. Because Libor at the time was well over 5 per cent, DIC was paying roughly 5.8 per cent on those loans. Now it appears to have refinanced the loans at an even lower rate, provided you don't include the fees. Fees back then were reportedly no higher than 45 bps, so the overall cost of borrowing was 6.25 per cent. Some have suspected that companies have been convincing banks to offer them lower interest rates in return for heavily padded fees, which with fees now of 300 bps seems to be part of the DIC deal. DIC has therefore refinanced at a higher rate about a percentage point higher than its original 2006 financing.

What was the money for? Helping to pay 675 million pounds for Travelodge of the UK. That was the same year DIC bought Madame Tussaud's. It has since sold off part of Travelodge and all but 20 per cent of Tussaud's to Blackstone. Travelodge's expansion plans ran smack into the global recession, and DIC earlier this year had to inject 20 million pounds into Travelodge as part of a deal to refinance the hotel chain's own debt.

Now, according to MEED, DIC is offering to let banks lend as little as $15 million each of the $550 million in order to make the deal more digestible to more banks.

Beach hotels lead Dubai tourism recovery (Re-post)

Dubai beach hotel occupancy and room rates are almost back to boom time levels as this key sector of the economy leads the local recovery.

However, it is a different story for the city hotels where a tidal wave of new room inventory is keeping the market under pressure, making life for the new entrants and old favorites equally difficult. At the same time Dubai exhibition and conference attendance has slumped knocking another source of guests.

Beach hotel boom

On the beach the hotels are booming. The Royal Meridien is 96 per cent occupied and charging AED1,500 per night again. Jumeirah says its beach hotels are also full.

Investor confidence in Qatar surpasses GCC’s

Investor confidence in Qatar was higher than the GCC average in October thanks to the the strength of its macro economy, a survey by Shuaa Capital found.

In its latest GCC Investor Sentiment Report, Shuaa also said the price of crude oil was expected to rise further and that investors were also bullish on gold.

Qatar’s investor confidence index jumped 7.3 points to 143.1, which is higher than the GCC average of 132.2 points, said Shuaa Capital.

“The Qatar Index has consistently been one of the highest Indices in the region and after last month’s dip, Qatar has bounced back by recording its highest ever index of 143.1 this month,” said Oliver Schutzmann, Chief Communications Officer of Shuaa Capital.

UAE fund eyes India power for Indonesian coal

The UAE's Middle East Coal (MEC) is in talks to buy equity stakes in India's power plants in exchange for long-term coal supply, an executive said on Monday.

MEC is joint venture between UAE investment fund RAK Minerals and Metals Investments (RMMI) and UAE-based mining company Trimex. RMMI won a license in March to build a 150 km (93 miles) rail link carrying coal from a mine in Indonesia's East Kalimantan province to a coal terminal.

"We are close to signing a contact with a number of Indian power plants who need to be supplied with coal over the coming 15 years, the deals will be finalised by the end of next month," said Madu Koneru, vice chairman of Middle East Coal.

Qatar eyes China as big new LNG volumes come online

Qatar is looking to China to absorb some of the huge increase in liquefied natural gas (LNG) supplies as the world's biggest LNG exporter nears completion of its plan to double production capacity this year.

Qatar inaugurates on Tuesday the second of three giant LNG plants it has started up in 2009. The plants are the largest in the world, and were expected to help Qatar's economic growth this year outperform oil-exporting Gulf Arab neighbours constrained by OPEC output quotas.

Tiny Qatar sits atop the world's third-largest gas reserves and has gambled tens of billions of dollars on developing its resources, but a huge amount of new supply is coming to a market which has lost some of its appetite in the biggest economic downturn in decades.

Dubai's $6.5B Bond Program Could Be Priced At 6% - Rasmala

Debt-laden Dubai government's latest $6.5 billion bond program could yield 6%, higher pricing than seen for similar bonds issued by oil-rich Abu Dhabi, according to a senior executive at Dubai-based investment bank Rasmala.

Eric Swats, head of asset management at Rasmala, said in a radio interview with Dubai Eye Monday that he expects investor interest in the debt if its priced at around 6%.

The Government of Dubai issued a preliminary prospectus on Oct. 21 to raise $4 billion through a Euro Medium-Term Note, or EMTN, program for "infrastructure, financing and general budgetary purposes," according to a copy of the document seen by Zawya Dow Jones.

At the same time Dubai's Department Of Finance, through a Cayman Islands entity known as Dubai DOF Sukuk Ltd., issued a prospectus to possibly raise $2.5 billion in Islamic bonds, or sukuk.

The Dubai Department of Finance is half way through a round of global roadshows that began last week in Hong Kong to market its debt to investors. Next stops are London and Frankfurt this week.

Dubai Bonds May Yield Same as Companies One Level Above Junk

Dubai, in its first international bond sale in 18 months, is being treated by investors the same as Russian companies with the lowest investment-grade ratings.

The sheikdom’s planned dollar-denominated securities, which aren’t rated, will be sold to yield 350 basis points to 400 basis points over the benchmark midswap rate, said three investors approached for the sale. That equates to a premium of 50 basis points, or 0.50 percentage point, more than debt sold by Russian issuers such as OAO Sberbank, which is rated BBB, two levels above high-yield, high-risk debt, Commerzbank AG says.

“It’s pretty fair to consider Dubai an investment grade credit at the BBB- or even a BBB level,” Luis Costa, an emerging-market debt strategist in London, said in a telephone interview. “Although the credit-quality may be aligned to its other BBB-area peers, you still have to input some premium given the leverage in Dubai.”