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Thursday, 19 November 2009

Al-Jasser Says Saudi Arabia to Continue ‘Aggressive’ Spending

Saudi Arabia, the world’s biggest oil producer, will continue “aggressive” spending, central bank governor Muhammad al-Jasser said in Frankfurt today.

“For the past two years and for the next two years also we have a very aggressive, ambitious spending program,” al-Jasser said. It “is counter-cyclical and taking advantage of the upswing which we enjoyed before the crisis and to complete the investment program of the country going forward. With monetary policy also we have acted counter-cyclically.”END

U.A.E. Shares Tumble to Two-Week Low on Bank Loan Disclosures

United Arab Emirates shares closed at their lowest level in about two weeks, led by Abu Dhabi Commercial Bank and Emaar Properties PJSC, after the central bank said domestic lenders are owed $2.9 billion by two troubled Saudi family businesses.

Abu Dhabi Commercial, the U.A.E.’s third-biggest bank by assets, declined the most since Nov. 1, while Emaar, the country’s biggest property developer, fell for a third day to its lowest level in more than a week. Home prices in the emirate may take at least a decade to recover, UBS said in a report yesterday. The Dubai Financial Market General Index slid 0.8 percent while Abu Dhabi’s index lost 0.9 percent.

“Real estate is weak due to negative sentiment in a UBS report on real estate and the central bank disclosure on the U.A.E. banking sector exposure to Saad and Al Gosaibi is impacting markets,” said Mark Friedenthal, a fund manager at Abu Dhabi Commercial Bank.

Are investors fishing for Gulf bonds near the market top? « ArabianMoney.Net

Foreign and local investors are snapping up bonds issued by Gulf companies and governments. Yesterday Qatar announced a $7 billion bond sale, the biggest and most tightly priced to date.

But are investors buying at the top of the bond market? Yields are exceptionally low. Perhaps they should really be looking at Gulf stock markets for value, or be preparing to do so if local markets have a correction after the long rally since February...........

Qatar to Build $9.8 Billion Plants in China, Vietnam

Qatar Petroleum International, a unit of the emirate’s state-run oil company, plans to build two petrochemical plants costing about $9.8 billion in Asia by 2015 to tap demand in the world’s fastest-growing region.

Qatar will partner Cnooc Ltd. and a Chinese petrochemicals maker to construct a $5.8 billion plant in China’s Hainan province, Chief Executive Officer Nasser al-Jaidah said in an interview in Tokyo yesterday. Another project in Vietnam will cost as much as $4 billion and both ventures will use Qatari liquefied petroleum gas to produce chemicals, he said.

“There is huge potential for growth in Asia, especially China,” al-Jaidah said. “We can hit two birds with one stone -- tap the markets and exit our product,” he said, without disclosing Qatar’s share of investment in the venture.

Perla Group plans IPO to raise $33m

Dubai-based Perla Group International, which is scheduled to set up an assembly unit for petrol-run helicopters in the UAE, is planning to go public in February 2010 to raise $33 million (Dh121m).

Initially the company will produce two-seater AK1-3 helicopters.

Charles S D'Alberto, Chief Executive Officer of Perla Group International, told Emirates Business: "We are exploring possibilities to set up our unit in Sharjah, Dubai and Abu Dhabi. We are in discussions with Dubai Aviation City and most probably I guess it will be in Dubai. We are planning to invest about $10m in the new assembly unit. Our helicopter is priced very attractively. We are targeting more than $20m revenues in next year,"

Kotak Mahindra Bank to launch Dubai office soon

India's Kotak Mahindra Bank would soon come up with its representative office in Abu Dhabi, its Executive Vice-Chairman and Managing Director Uday Kotak told Emirates Business.

The group has major foreign expansion plans to increase the share of overseas business to almost 20 per cent within the next three to five years and UAE will have a major share in that.

The bank opened a representative office in Dubai and will also set up a subsidiary of Kotak Securities called Kotak Financial Services.

UP restructuring Dh2.75bn loan

Union Properties (UP), the oldest listed property developer in Dubai, has finalised restructuring of a Dh2.75 billion syndicated loan, which was lead-managed by Emirates NBD, according to a top official of the property major.

Talking to Emirates Business, Khalid Kalban, Vice-Chairman of UP, who also represents several major companies on their boards, said an official announcement on the conclusion of the restructuring plan will be made soon. "I don't have all the details of the restructuring plan with me now. What I can tell you is that this is a syndicated loan that was arranged by Emirates Bank," said Kalban.

The then Emirates Bank, along with 17 other local, regional and international banks, arranged the three-year Dh2.75bn-syndicated loan for UP in June 2007. The company, in its notes to the nine-month financial statements, said: "The group is in the final stages of restructuring the syndicated loan, and the company, on the basis of its review of the ongoing negotiations with the creditor banks, strongly believes that these negotiations for restructuring the terms of the syndicated loan will conclude in a satisfactory manner."

The firm has net current liabilities of Dh3.773bn as of end-September. This includes short-term bank borrowings amounting to Dh1.17bn and current portion of long-term bank loans amounting to Dh2.978bn.END

Rise of sovereign wealth funds set to resume

A report by the Ernst & Young Item Club released yesterday highlights that despite the impact of the last 12 months sovereign wealth funds (SWFs) are poised to enter another period of sustained and impressive growth.

The disparity in economic growth seen over the last decade between the developed and emerging markets will be heightened by the latter's rapid emergence from recession. Item forecast that the BRICs (Brazil, Russia, India and China) are expected to contribute 40 per cent of global growth between 2010 and 2020 — with China accounting for a quarter. Although the recession has reduced global imbalances, China and the Middle East in particular have continued to run large surpluses and amass reserves.

UAE banks: $2.9b exposure to Saad, Algosaibi

The UAE Central Bank said yesterday that banks operating in the country have a combined exposure of $2.9 billion (Dh10.7 billion) to Saudi Arabia's troubled business groups — Saad and Algosaibi — and ordered the banks exposed to take specific provisions for bad loans.

"The number of lending banks to the two groups and their related banks is 20 banks, 13 national banks and 7 foreign bank branches operating in the UAE. Their funded and unfunded exposures amount to $2.9 billion," the bank said in a statement.

The Central Bank said provisions should be made by the banks as follows: exposures to Algosaibi group, funded and unfunded, at 50 per cent, exposures to Saad group, funded and unfunded, at 50 per cent, exposures to The International Banking Corporation (TIBC), funded and unfunded, at 100 per cent and exposures to Awal Bank, funded and unfunded, at 100 per cent.

Dubai property market remains ‘fragile’, says UBS report

Dubai property prices could drop another 30 per cent over the next 18 months and may take at least 10 years to recover to peak levels, a report by UBS says.

More than a quarter of available homes in the emirate could be empty by the end of next year as the population decreases, the Swiss bank said.

The report is one of the most bearish assessments yet of the property market in Dubai and follows a more upbeat view from Deutsche Bank earlier this month that indicated the market may be “bottoming out” and pointing to a recovery beginning early next year.

Banks face new capital rules

The Central Bank has told lenders they will need to start complying with the Basel II regulations on capital adequacy for banks from next year.

The move represents the first major step to bring UAE banks in line with their US and European peers which have largely introduced the new rules.

“This step helps to confirm what the market has been expecting,” said Raj Madha, an analyst at EFG-Hermes.

Gosaibi offering pennies on dollar to settle

Troubled Saudi conglomerate Ahmad Hamad Al Gosaibi Bros. & Co., or AHAB, is offering creditors as little as 8.6 cents on the dollar to settle outstanding debts, bankers familiar with negotiations said.

"Banks find this ridiculous," said a banker, with exposure to the group, based in the United Arab Emirates.

Creditors met representatives of the Al Gosaibi family in Al Khobar, Saudi Arabia on Nov. 4, bankers attending meetings said. AHAB has offered up to 3 billion Saudi riyals ($800 million) worth of assets, against SAR26.3 billion of total claims from the steering committee representing global lenders, bankers said.

ENOC hires proxy firm to win over Dragon investors

Shareholder consultancy Georgeson is working to persuade minority investors in Turkmenistan-focused oil explorer Dragon Oil (DGO.I) (DGO.L) to accept ENOC's $1.9 billion buyout bid, people familiar with the matter said.

ENOC's proposal requires approval from three-quarters of Dragon's minority shareholders, but with the largest of those publicly opposing the deal, ensuring a high turnout and convincing wavering investors to agree could be crucial.

Georgeson is a so-called "proxy solicitation" firm that communicates with shareholders and looks to boost investor turnout for votes. The firm was appointed on ENOC's behalf by the Dubai refiner's broker, Goodbody, one of the people said.

Panmure Gordon to grow asset management arm

Panmure Gordon (PMR.L: Quote, Profile, Research, Stock Buzz), the venerable UK stockbroker which is 44 percent-owned by Qatar's top investment bank, told Reuters it wants to expand its asset management arm and may consider small acquisitions.

"It's possible that I'll go off and buy something," Panmure Chief Executive Tim Linacre told the Reuters Global Finance Summit in London.

Panmure Gordon, which was founded in London in 1876, historically had an asset management business but Linacre said this division had undergone several restructurings over the years as Panmure went through a series of ownership changes, which included spells being owned by Lazard and WestLB.

Emerging Market Sovereign Debt Issuance Is at Record Levels

A mammoth bond offer from the oil-rich state of Qatar has brought the total amount of government debt issuance from the developing world this year to record levels.

Total sovereign issuance now stands at an unprecedented $93 billion for 2009, according to David Spegel, ING's head of emerging market debt strategy. JPMorgan estimates a total of $71 billion for the year, the highest since 2001.

Estimates vary because analysts have different interpretations over what's included in the emerging markets universe and what constitutes a sovereign offer. ING's tally, for example, includes municipalities like the city of Warsaw, which issued bonds in April.