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Wednesday, 9 December 2009

FT Alphaville » Blog Archive » Quasi-sovereign downgrades, Moody’s and the UAE edition

FT Alphaville » Blog Archive » Quasi-sovereign downgrades, Moody’s and the UAE edition

Qatar emir calls for gas and oil price alignment

The emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, on Wednesday called for the alignment of gas prices with oil prices at the opening of a forum of gas exporting countries.

"The increase experienced by the oil price this year has not been followed by an improvement in gas prices, and we hope that this will only be temporary," the emir told the Gas Exporting Countries Forum.

"It is necessary to work to restore the correlation between the price of oil and gas, and the decisions taken by this board must be equal to our ambitions," he added.

Gas prices collapsed late last year in line with oil, which plunged from a high of around 147 dollars per barrel to 37 dollars before stabilising at around 75 dollars this year.

The one-day forum in Doha brings together a dozen countries including Russia, the world's largest gas producer, as well as Algeria, Iran and Venezuela.END

Dubai Shares Erase 2009 Gains on Dubai World Debt Restructuring

Dubai shares tumbled for a third day, erasing all of this year’s gains, as Dubai World planned asset sales and Moody’s Investors Service downgraded six government- controlled entities.

Emaar Properties PJSC, the United Arab Emirates’ biggest developer, plunged to the lowest since July after it was cut by Moody’s. Emirates NBD PJSC dropped 4.7 percent after JPMorgan Chase & Co. downgraded the shares to “neutral.” The DFM General Index tumbled 6.4 percent, the biggest fluctuation among global benchmarks tracked by Bloomberg, to 1,533.36. The measure has lost 27 percent since the emirate on Nov. 25 said Dubai World is seeking to restructure debt. The index, down 6.3 percent this year, is the world’s worst performer this quarter.

“It is really a disaster,” said Mohamed Dwaikat, senior broker at Al-Fajer Securities in Abu Dhabi. “Investors are concerned about the banks” and the future of Dubai Holding LLC, he said. “Investors just want to sell off and get out of the market.”

Dubai Holding cuts EFG stake, debt issues on horizon

A unit of Dubai Holding has sold a 7 percent stake in Egyptian investment bank EFG Hermes (HRHO.CA) for $120 million, a TV station reported, in a sign the emirate's debt crisis is moving beyond troubled Dubai World.

Dubai's debt saga has shaken global investors since the emirate's Nov. 25 announcement it wanted a standstill on Dubai World debt. Fears are growing that Dubai Holding, which belongs to the ruler of the emirate, will be next to be restructured. [ID:nGEE5B80IB]

The 25 Egyptian pounds per EFG share sale to Western investment funds will leave Dubai Group with 75 percent of its holding in the investment bank, Al Arabyiya television reported on Wednesday.

Dubai Company Bonds Dive as Swaps Show Default Risk

The tumble in bonds of Dubai’s state- controlled companies to record lows signals growing concern more borrowers will fall behind on debt payments as Dubai World seeks to restructure $26 billion of obligations.

“We are concerned that it’s just not Dubai World that has issues,” said Oliver Bell, the head of Middle East and Africa investment at Pictet Asset Management in London, which has $120 billion under management. “The health of other government- related entities is in question.”

Dubai World property unit Nakheel PJSC’s $3.52 billion of Islamic bonds due Dec. 14 dropped 1 percent, extending yesterday’s 10 percent slide to head for a record-low close at 47 cents on the dollar, according to Citigroup Inc. Bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state-run companies. A jump in the cost of DP World Ltd.’s credit-default swaps implied a 35 percent risk that the port operator will renege on debt.

NASDAQ Dubai

NASDAQ Dubai

StanChart Set For Record Profit - NYTimes.com

StanChart Set For Record Profit - NYTimes.com

FT Alphaville » Blog Archive » A closer look inside Nakheel

FT Alphaville » Blog Archive » A closer look inside Nakheel

The Gulf Curve: GCC Credit Thoughts – December 9, 2009

The Gulf Curve: GCC Credit Thoughts – December 9, 2009

FT Alphaville » Blog Archive » A closer look inside Nakheel

FT Alphaville » Blog Archive » A closer look inside Nakheel

Tough CAR rules in UAE may trigger bank mergers

Tough capital adequacy regulations issued by the UAE Central Bank could trigger fresh mergers among the country's banks as they will need to strengthen their financial base, a UAE analyst said yesterday.

Merger plans could also be precipitated by declining liquidity and profits at many banks because of the global financial turmoil and debt default crises in the region, said Karim El Solh, CEO of the Abu Dhabi-based Gulf Capital.

Solh said the crisis had weakened many banks in the Gulf and other parts of the Middle East, adding this has already spurred stricter central bank regulations, which in turn has prompted mergers in Lebanon.

Recovery offers opening to region

While the Middle East has weathered the global recession better than many parts of the world, the region faces a steep climb to restore pre-recession levels of economic growth, a panel of economists told the inaugural meeting of the Arab Global Forum this week.

Some countries, including Morocco and Tunisia, have fared well through sound investments and government reforms, the economists said. Some oil-producing countries, meanwhile, reduced the effects of the crisis by maintaining public expenditure in the face of declining revenues.

“Because they continued to spend, this limited the effect of lower oil prices,” said Masood Ahmed, the director of the IMF’s Middle East and Central Asia department.

New Abu Dhabi finance policy body to guide growth

Abu Dhabi has launched an economic think-tank to assist policymakers in shaping the growth of the emirate.

Researchers starting work at the Abu Dhabi Economic Research Agency (ADERA) next month will focus on a number of key areas of study such as sustainable economic growth, the role of financial markets in the wider economy, energy and the environment and labour markets.

Initially operating under the guidance of the Abu Dhabi Department of Economic Development (DED), the plan is for the agency to eventually run as entity fully independent from the Government, officials said.

Dubai Drydocks not included in Dubai World revamp

Dubai World [DBWLD] on Tuesday moved to protect its Drydocks World unit saying it would not be part of Dubai World's wider $26 billion restructuring programme as it had sufficient financial capacity to service its debt.

"Following further review, Drydocks World and its subsidiaries will not be included in the proposed restructuring process for Dubai World and its real estate-related subsidiaries," Dubai World said in a statement.

The struggling state-owned conglomerate Dubai World on Nov.30 shed some light on how it planned to restructure its debt pile, including through asset sales, but said Istithmar World, DP World DPW.DI and Jebel Ali Free Zone would not be part of it.

Dubai Company Bonds Dive as Swaps Show Default Risk

The tumble in bonds of Dubai’s state-controlled companies to record lows signals growing concern more borrowers will fall behind on debt payments as Dubai World seeks to restructure $26 billion of obligations.

“We are concerned that it’s just not Dubai World that has issues,” said Oliver Bell, the head of Middle East and Africa investment at Pictet Asset Management in London, which has $120 billion under management. “The health of other government- related entities is in question.”

Dubai World property unit Nakheel PJSC’s $3.52 billion of Islamic bonds due Dec. 14 dropped more than 10 percent yesterday to 46.5 cents on the dollar, according to Citigroup Inc. Bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state- run companies. A jump in the cost of DP World Ltd.’s credit- default swaps implied a 33 percent risk that the port operator will renege on debt.

Documents show earlier Dubai World bailout

The property subsidiary of Dubai World, the stricken Gulf investment group, could have lost up to $6 billion (£3.7 billion) in the first half of this year had it not been given government bailouts, it has emerged.

The continued bad news from Dubai World sent investor confidence in the Gulf state crashing yesterday, while in Britain fears about the state-backed investment company hit Royal Bank of Scotland, one of its main lenders.

Leaked documents indicated that Nakheel, Dubai World’s property division, which owns The Palm and The World developments, lost 13.4 billion dirhams (£2.2 billion) in the first half of the year.

Dubai World loses control of New York hotel

Dubai World's investment arm, Istithmar, lost ownership of the W Union Square New York hotel in a foreclosure auction Tuesday.

One of the hotel's interim lenders, a private equity firm called LEM Mezzanine, acquired the 270-room hotel for $2 million, according to Dow Jones. The sale was another financial blow to Istithmar, which acquired the hotel in October 2006 for $285 million, according to Real Capital Analytics, a data tracking firm.

Calls to Dubai World and LEM Mezzanine were not immediately returned. LEM said in a statement it plans to continue to operate the hotel and hopes to "take full advantage of any market recovery."

Gas exporters to meet in Qatar on Wednesday

The ninth ministerial forum of gas exporting countries will be held on Wednesday in the Qatari capital Doha.

Ministers of 11 countries making part of the Gas Exporting Countries Forum (GECF), a "gas equivalent" of the Organization of the Petroleum Exporting Countries (OPEC), will discuss ways to stabilize global prices on natural gas.

They will also consider candidacies for the post of the forum's secretary general.

Should the forum participants fail to come to an agreement, the secretary general, elected for a two-year term and entitled for reelection once, will be chosen from the list in the alphabetical order, which means an Algerian candidate could take the post.

Qatari Energy Minister Abdullah bin Hamad al-Attiyah is acting GECF chairman now.
The forum comprises Qatar, Russia, Algeria, Bolivia, Venezuela, Egypt, Iran, Libya, Nigeria, Trinidad and Tobago and Equatorial Guinea.

GECF was established in the Iranian capital Tehran in 2001. Its charter was adopted at the seventh ministerial meeting in Moscow in 2008.END

Jobs lost in crunch

TWELVE per cent of skilled workers in Bahrain have lost their jobs as a result of the global credit crunch, according to a Gulf-wide study.

Pay rises have also been affected by the downturn but the region remains in a healthier state than most, found the Middle East recruitment firm GulfTalent.com.

The study, Employment and Salary Trends in the Gulf 2009-2010, is the agency's fifth annual report of its kind and provided a comprehensive account of the impact that the downturn has had on recruitment and pay.

GCC plans $60bn railway project

A $60 billion railway project to connect Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and eventually Oman will be on the agenda of the summit of the six-nation Gulf Cooperation Council (GCC) heads of state.

Custodian of the Two Holy Mosques King Abdullah will head the Kingdom’s delegation to the meeting in Kuwait on Dec. 14, said senior officials of the GCC General Secretariat on Tuesday. The railway project is planned for completion by 2017.

The railway will offer transportation connections for GCC that currently relies on trucks, ships and planes which are often more expensive than transportation by rail.

HRH CROWN PRINCE REVIEWS BAHRAIN FINANCIAL OUTLOOK

BAHRAIN HAS BEEN ABLE, THANKS TO THE WISE LEADERSHIP OF HIS MAJESTY KING HAMAD BIN ISA AL KHALIFA, TO WITHSTAND THE APOGEE OF THE GLOBAL FINANCIAL CRISIS LAST YEAR, HIS ROYAL HIGHNESS CROWN PRINCE SALMAN BIN HAMAD AL KHALIFA, THE ECONOMIC DEVELOPMENT BOARD (EDB) CHAIRMAN, SAID AS HE LISTENED TO A DETAILED PRESENTATION ON THE KINGDOM'S ECONOMIC OUTLOOK AMID THE GLOBAL DOWNTURN.
HE ALSO URGED THOSE IN CHARGE OF FINANCIAL AND ECONOMIC MANAGEMENT TO BE CAUTIOUS IN ALL DECISIONS TO SAFEGUARD FINANCIAL AND ECONOMIC STABILITY IN BAHRAIN. THE KINGDOM'S ECONOMIC STRATEGY WILL GO AHEAD, GOD WILLING, WITH THE SAME MOMENTUM BASED ON THINKING, STUDY AND CAREFUL PLANNING, HE SAID. THEN, HRH THE CROWN PRINCE LISTENED IN THE PRESENCE OF DEPUTY PREMIER SHAIKH MOHAMMED BIN MUBARAK AL KHALIFA, ROYAL COURT MINISTER SHAIKH KHALID BIN AHMED AL KHALIFA AND PREMIER'S COURT MINISTER SHAIKH KHALID BIN ABDULLAH AL KHALIFA TO DETAILED PRESENTATIONS BY FINANCE MINISTER SHAIKH AHMED BIN MOHAMMED AL KHALIFA AND CENTRAL BANK OF BAHRAIN (CBB) GOVERNOR RASHEED AL MARAJ ON THE KINGDOM'S BANKING AND FINANCIAL SITUATION, THE LATEST DEVELOPMENTS OF THE GLOBAL ECONOMIC CRISIS AND BAHRAIN'S CONTINGENCY PLAN TO AVERT ITS EFFECTS. PRESENT AT THE MEETING WERE EDB CHIEF EXECUTIVE SHAIKH MOHAMMED BIN ISA AL KHALIFA AND CROWN PRINCE COURT'S HEAD SHAIKH KHALIFA BIN DAIJ AL KHALIFA.

Dubai utility faces $2bn debt demand

The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a $2bn debt issued by the emirate’s utilities provider.

Dubai Electricity and Water Authority’s $2bn securitisation programme, Thor Asset Purchase Company, an instrument originally maturing in 2036, may have to be redeemed in full on December 14 – the day Dubai World’s property developer, Nakheel, is due to redeem a $4bn Islamic bond, or sukuk.

The payment acceleration underlines how Dubai’s attempts to restructure $26bn of debts at the Dubai World conglomerate is spreading to other, healthier parts of the economy.