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Monday, 14 December 2009

TEXT-Dubai govt details on new insolvency decree | Reuters

TEXT-Dubai govt details on new insolvency decree
| Reuters


Precis of 23 page Decree.

No plan to change UAE bank ratings - S&P

Ratings agency Standard and Poors does not plan changes to its ratings of United Arab Emirates banks, several of which have exposure to Dubai World, after renewed statements of support from the central bank.

"From our understanding of the statement today central bank support for UAE banks is not something new and we already factor in exceptional support for the banks in our ratings," said Emmanuel Volland, senior director for financial institutions ratings at the agency.

"So, at present there is no rationale to change the notchings for UAE banks."

TRANSCRIPT(of conference call with unnamed UAE official)-Abu Dhabi gives Dubai $10 bln bailout

Dubai's government held a conference call on Monday to discuss the deal with a government source taking questions.

Following is a transcript of the key points made by the source, who declined to give his name:

IS THIS A BAILOUT?

Abu Dhabi and Dubai are clearly working as partners here to find a good, fair solution to the Dubai World situation. The key part is buying time to allow Dubai World and creditors the opportunity to come together on consensual restructuring.

There are no conditions. This is a government-to-government fund, the terms of that fund are internal to the government of Abu Dhabi and Dubai. These funds are specifically for Dubai World.

I won't go into specifics. There is no conditionality. Abu Dhabi has made it clear it is there to support Dubai, Dubai World and I won't go into specifics of how the money is being handed. What's important is we have two partners that will help each other and help the UAE (United Arab Emirates).

BANKRUPTCY LAW

The government of Dubai has been in consultation for some time with bankruptcy professionals and international judges to develop a framework that is transparent, fair and acceptable to all parties. The current UAE bankruptcy laws are largely untested and (their) administration by Dubai courts poses certain challenges and problems for a large and complex bankruptcy of this size. These (new) laws should allow Dubai World, should it choose it to use the laws to achieve its restructuring and remaining obligations should it not find a consensual restructuring with its creditors.

The decree (for the new laws) was signed last night and will be announced later today.

To the extent it is unable to reach a consensual restructuring with lenders, the government wanted to make sure there was a fair and equitable way for it to restructure its debt. If it doesn't work, we wanted to make sure there was a fair and equitable framework to restructure its debt. I won't say it won't file or will file (for bankruptcy), but we wanted to make sure the company has the protection it needs if it goes to the courts.

DUBAI WORLD ASSET SALES

It is premature to speculate on the outcome of the reorganisation process. All options will be assessed and all options have been discussed between the government of Abu Dhabi and Dubai. The plan will be developed in consultation with all stakeholders and probably could include the sale of assets. That will be something agreed to by everybody involved.

Dubai has not given anything up and there are no conditions on the money. Abu Dhabi provided the money to support Dubai and support Dubai World because it believes it's in the long-term strategy of Dubai, Abu Dhabi and the UAE.

This is specifically for Dubai World and the affected assets, which were talked about in earlier press releases. It's not meant to include any other assets. It does not include the ports, Jebel Ali Free Zone Authority. All the things that were talked about that were unaffected remain unaffected and will not be affected in any way.

TIMEFRAME FOR FUNDING

In consultation with Dubai World, it will use the grace period to assess and transfer funds. These funds will be immediately available to the Dubai Support Fund and it will make the first $4.1 billion immediately available to Dubai World.

FUNDING FOR OTHER DUBAI GOVERMENT ENTITIES

It's important to realise that this solution was reached due to exceptional credit circumstances in relation to Dubai World and should not be taken as an indication of how GRE (government-related entities) debt will be handled. All GREs will be continually reviewed on a case by case basis.

WHY DID IT COME DOWN TO THE LAST MINUTE?

Like any other maturity, the bonds (issued by Dubai unit Nakheel) weren't due until today. Any plans or announcement would come on the day the bonds are due. The bonds are technically not due for 14 days. The government wanted to take coordinated action that provided a comprehensive plan and complete solution to the problem.

RESTRUCTURING PLAN

This is something the company will provide clarity on in the next few weeks. We wanted to give the company a framework and provide a process with which they can have that conversation with lenders. From a government perspective, the company needs to find a long-term solution to the capital structure and had to put tools in place for them to do that.

CENTRAL BANK FACILITY

The central bank has come out clearly and they have all agreed that the central bank will inject liquidity into the banks as needed with respect to their exposure to Dubai World and its entities. Alternatively the goal is to provide a framework to provide support and that's the most important thing.

Kuwait KIA, BlackRock eye foreign bank stakes-paper | Reuters

Kuwait KIA, BlackRock eye foreign bank stakes-paper
| Reuters

FT Alphaville » Blog Archive » Dubai’s Nakheel sticking plaster

FT Alphaville » Blog Archive » Dubai’s Nakheel sticking plaster

U.A.E. Stocks Gain Most in World as Abu Dhabi Bails Out Dubai

United Arab Emirates shares surged the most in more than a year after the Abu Dhabi government provided $10 billion to Dubai to help pay debt, including the $4.1 billion needed for Nakheel PJSC’s bond maturing today.

Emaar Properties PJSC, the country’s biggest developer, climbed 15 percent, the most permitted by exchange rules. Emirates NBD PJSC, the U.A.E.’s largest lender, added the most since October. DP World Ltd., the Middle East’s biggest ports operator and a unit of Dubai World, advanced to the highest this month. First Gulf Bank PJSC jumped the most since May 2005.

The DFM General Index added 10 percent, the biggest intraday gain since October 2008, to 1,871.2 at 12:22 p.m. in the emirate. The measure had tumbled 19 percent since Dubai World on Nov. 25 sought a “standstill” agreement on its debt. The ADX General Index, in the neighboring sheikhdom of Abu Dhabi, rose 7.9 percent. The U.A.E. gauges had the biggest gains among global benchmarks tracked by Bloomberg.

Fidessa partner with Mubasher Financial Services - Business Intelligence Middle East - bi-me.com - News, analysis, reports

Fidessa partner with Mubasher Financial Services - Business Intelligence Middle East - bi-me.com - News, analysis, reports

FT.com / Middle East / Finance - Abu Dhabi steps in to bail out Dubai

FT.com / Middle East / Finance - Abu Dhabi steps in to bail out Dubai Updated

FT.com / Middle East / Finance - Abu Dhabi steps in to bail out Dubai

FT.com / Middle East / Finance - Abu Dhabi steps in to bail out Dubai

UAE cbank to support local banks exposed to Dubai World | Reuters

UAE cbank to support local banks exposed to Dubai World
| Reuters

Nikkei trims losses on Dubai; construction firms up | Reuters

Nikkei trims losses on Dubai; construction firms up
| Reuters

TEXT-Dubai govt statement on restructuring, aid

The following statement was issued by the government of Dubai:

BONDS

STATEMENT FROM HH SHEIKH AHMAD BIN SAEED AL MAKTOUM, CHAIRMAN OF THE DUBAI SUPREME FISCAL COMMITTEE

Dubai - 14 December 2009: The Government of Dubai, acting through the Supreme Fiscal Committee ("SFC"), today announces a set of actions in relation to Dubai World: HH Sheikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee said:

"Like other global financial centers, Dubai has faced recent market challenges driven by the global economic slowdown and a severe real estate market correction.

"Recently, Dubai World announced that it might not be able to commercially support its obligations. Since that time, the Government of Dubai has worked closely with the Abu Dhabi Government and the UAE Central Bank in addressing and assessing the impact of Dubai World on the UAE economy, banking system and investor confidence.

"The following provides a comprehensive set of actions:

"First, the Government of Abu Dhabi and the UAE Central Bank have agreed to provide important support.

"Specifically, the Government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.

"As a first action for the new fund, the Government of Dubai has authorized $4.1 billion to be used to pay the sukuk obligations that are due today.

"The remaining funds would also provide for interest expenses and company working capital through April 30, 2010 - conditioned on the company being successful in negotiating a standstill as previously announced.

"In addition, the Government of Dubai is particularly focused on addressing the concerns of Dubai World trade creditors within the Emirate of Dubai. To help address these concerns, today the Government of Dubai is announcing that the remainder of the funds provided will be used for the satisfaction of obligations to existing trade creditors and contractors. Discussions with affected contractors will begin in short order.

"Next, the Central Bank is also prepared to provide support to local UAE banks.

"Finally, today the Government of Dubai will announce a comprehensive reorganization law, a framework that is based upon internationally accepted standards for transparency and creditor protection. This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.

"Today's actions, taken together, demonstrate our strong commitment as a global financial leader to transparency, good governance, and market principles. There will certainly be challenges periodically, just as there are challenges in other major financial centers around the globe. We believe today's actions will best serve the interests of all stakeholders.

"We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices. Dubai is, and will continue to be, a strong and vibrant global financial center. Our best days are yet to come.

"The Government of Dubai remains committed to its high standards and its obligations. We are confident in our economic model, and we are confident in the long-term health and outlook for our economy.

"The actions taken today are consistent with our market development, and we believe they are the actions that will best serve the interests of all stakeholders."END

Abu Dhabi gives $10 billion to Dubai, repays Nakheel bond

Dubai said on Monday it had received $10 billion from fellow UAE member Abu Dhabi to help it repay $4.1 billion Islamic bond maturing on Monday.

The statement said the excess would be used to cater to Dubai Worlds needs up until the end of April 2010.

"We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheikh Ahmed bin Saaed al-Maktoum said in a statement. "Dubai is, and will continue to be, a strong and vibrant global financial center. Our best days are yet to come.

Abu Dhabi is the largest member of the United Arab Emirates federation and a major oil exporter

Listed firms will have a good financial year in 2009 (Interview)

Despite the global financial crisis, a top official of two leading financial institutions in the UAE says, public companies' 2009 results would show a "good financial year", setting a positive sentiment in the market.

Suresh Kumar, CEO of Emirates NBD Capital and Emirates Financial Services, said the growth would not be as phenomenal as in the past two years, but would be comparable to 2006 levels.

"Now you've got a fair amount of realism that indicates stability and that is the first step to confidence. That's why the audited results, which will be announced in late January or early February 2010 onwards, will be the basis for a positive sentiment," he told Emirates Business.

News Corp close to sealing Rotana deal

News Corp is in the final stages of closing a deal to buy at least a 10 per cent stake in Rotana Media and could complete the acquisition next month, a senior executive at Rotana said on Saturday.

“The deal is 99 per cent finished, not yet final, and will be announced … in January,” said Nezar Nagro, the president of Rotana Media Services.

Mr Nagro said the agreement is for News Corp to buy 10 per cent of the existing shares of Rotana, which is owned by Prince Alwaleed bin Talal of Saudi Arabia.

EMAL fires up its Taweelah smelter

Kilometres of production lines have sprung to life at the US$5.7 billion (Dh20.93bn) smelter operated by Emirates Aluminium (EMAL) in Taweelah, giving the firm a cash flow early next year but also putting it at the mercy of volatile commodity and debt markets.

The firm’s chief executive, Duncan Hedditch, said it is in the final stages of raising $700 million from an export credit agency and would not face difficulties in funding what could become the world’s largest aluminium production facility. However, he backed away from a spring timeline for a bond put forward by another EMAL executive, saying the firm faced “no time or other pressure”.

“Currently we’re project-financed and now we’re moving into operations, so we need to set up the financial gearing to support the business and deliver the performance we want,” he said. “The bond is a market timing thing. You just watch and wait until the timing and prices suit.”

United Arab Emirates Shares Climb on Dubai World Debt Optimism

Dubai shares posted the biggest two- day gain in more than a year and Abu Dhabi’s index added the most since March on bets Dubai World would make a last-minute move to avoid a default on its property unit.

Emaar Properties PJSC, the United Arab Emirates’ biggest property developer, jumped 6.8 percent, while National Bank of Abu Dhabi, the country’s second biggest lender by assets, increased the most in 10 months. The DFM General Index rose 3.3 percent to 1,695.35, bringing its two-day gain to 11 percent, the most since October 2008. Abu Dhabi’s measure added 4.5 percent, the biggest one-day jump since March 24.

Dubai’s index has tumbled 19 percent since Dubai World, the state-owned holding company, said on Nov. 25 it would seek a “standstill” agreement on its debt repayment, including for property unit Nakheel PJSC. The company’s $3.52 billion Islamic bond matures tomorrow. Dubai World began talks with banks two weeks ago to restructure $26 billion.

Bond Traders Put Pressure on Debt-Laden Nations

The bond vigilantes are back.

But this time they are roaming mostly through Europe rather than the United States — at least for now. Their mission: to force governments to cut budget deficits that have ballooned in the wake of the financial crisis.

As big investors in the credit markets, activist bond traders developed a fearsome reputation in the early 1990s by pushing up yields on Treasuries in order to force the government to tame large deficits. Their most famous target was a newly elected president, Bill Clinton, whom they pressured to abandon campaign promises of tax cuts.

Dubai Shows No Guarantee Gazprom, Pemex Bonds Backed by State

Norval Loftus left the meeting with Dubai officials in London on Oct. 27 believing the bonds he held from state-controlled property developer Nakheel PJSC were backed by the government.

“People were asking about Nakheel and getting a yes answer,” said Loftus, the head of convertible and Islamic bonds at Matrix Group in London, which manages $2.5 billion of assets. Now the securities are down more than 50 percent from their peak as Nakheel’s parent Dubai World seeks to reschedule $3.52 billion of principal that’s due today.

Nakheel’s debt restructuring, and Dubai’s refusal to guarantee timely repayment, is prompting investors from Mexico to South Korea to demand higher premiums for state-run company debt.

Dubai’s Nakheel Bondholders Face $5.25 Billion Default Today

Nakheel PJSC, a property unit of Dubai World, may seek to renegotiate the terms of $5.25 billion of debt due within the next two years with bondholders as its biggest obligation matures today.

The company’s possible non-payment of the $3.52 billion Islamic bond today would trigger two other defaults after the end of a 14-day grace period, bond documents show. The other two bonds are a 3.6 billion-dirham ($980 million) floating-rate note due in May and a 2.75 percent, $750 million sukuk maturing in January 2011.

The Dubai government said on Nov. 25 that state-run holding company Dubai World is seeking a “standstill” accord on its debt, including for the Nakheel unit. Nakheel’s bond maturing today surged 18 percent in the last two trading days to 53 cents on the dollar, according to Citigroup Inc. prices, on speculation the developer may seek to avoid a default. They traded as low as 45 cents on the dollar on Dec. 9.

Darkness is falling on Dubai's golden era

The leaders of Dubai have been accustomed to an easy ride when it comes to raising money, with bank and bond investors around the world willing to pump tens of billions of dollars into increasingly grandiose projects on the premise that, if anything went bad, the emirate and its oil-rich neighbor, Abu Dhabi, would stand behind the debt.

That era of easy money -- and a presumed government guarantee -- has been grinding to a halt for months now and officially ends on Monday, when the government of Dubai has said that one of its main government-owned companies will skip a scheduled $4 billion bond payment.

Although a negotiated agreement is still possible, analysts say that the uncertainty raised by Dubai's recent actions -- the government said last month that it was suspending payments for six months on a total of $26 billion owed by government-owned companies -- could put projects at risk throughout the region, bring closer scrutiny from banks and investors, and raise borrowing costs.

Oman's economy grew 1-2 pct in 2009 -Econ Min

Oman's economy was expected to grow by a sluggish 1-2 percent this year after being hit by lower oil prices in the second quarter, the country's economy minister Ahmad Mekki said in remarks published on Sunday.

The global economic crisis slashed income for Gulf Arab oil producing nations, sending the region's key economies into downturn this year.

Non-OPEC Oman was less affected than fellow oil exporters in the region because it did not have to join oil output cuts required by the group.

FACTBOX-What next for the Gulf Arab monetary union?

The four countries, which are still going on with the project are Saudi Arabia, Kuwait, Qatar and Bahrain.

Following are a few facts on what to expect next:

RATIFICATION

* The ratification process is complete with the four countries that are going ahead with the monetary union project finalising the deal ahead of this week's Gulf rulers' summit in Kuwait. [ID:nGEE5B70CA]

MONETARY POLICY

* Formation of a monetary council is expected to be announced during the GCC rulers' summit on Dec. 14-16.

* The Riyadh-based council will craft the joint monetary policy until the common central bank is established.

* The council should enable the monetary union partners to align their monetary policies in terms of currency, payment and settlement systems, reserves and budgetary procedures.

CURRENCY

* Gulf officials are generally in favour of adopting a U.S. dollar peg for the new single currency despite recent comments from individual countries that all options are open.

* Analysts say the members may go with the greenback peg initially to ensure a smooth transition as inflation remains well below last year's record highs despite the dollar weakness.

* Kuwait said the currency peg is a technical issue that may not be discussed during the summit.

* A future change of the foreign exchange regime is not ruled out.

* Kuwait is the only Gulf Arab country that abandoned the dollar peg in the past due to soaring inflation, linking its dinar to a currency basket in 2007.

HURDLES

* The dominance of Saudi Arabia, the top Arab economy and the world's largest oil exporter. Saudi Arabia's economy now accounts for nearly 63 percent of the currency union's gross domestic product.

* While the kingdom will be instrumental in driving the integration process, it's difficult to see an equal relationship with smaller states.

* Analysts have said the union was also hampered by lack of democratic accountability of rulers with fragile egos who jealously guard territories carved out in colonial times.

FUTURE TIMELINE

* In March 2009, the Gulf Cooperation Council (GCC) countries abandoned a 2010 target for issuing common notes and coins.

* The policymakers have said a new deadline could only be set after the monetary council starts operating.

* Kuwait has said a single currency may take up to 10 years.

* With a list of technical difficulties ahead and as some say hopes that the UAE would return to the pact, the monetary union is expected to proceed at a slow pace.END

DP World and Jafza seek to allay debt fears

The chief executives of two Dubai World subsidiaries excluded from the sprawling holding company's restructuring have outlined how they believe they can survive their parent's debt crisis largely unscathed.

Mohammed Sharaf of DP World, the world's fourth-largest container port -operator, and Salma Ali Saif Bin Hareb of Jebel Ali Free Zone Authority, an operator of customs-free trading zones, told the Financial Times they had plentiful cash to meet their finance and investment needs for the foreseeable future.

Both companies, which the government has said do not need debt restructuring, play an important part in facilitating trade between the Middle East and the wider world.

Relief as state's 25-year boom comes to an end

Even on a rainy Friday, the quietest day of its week, seven big container ships are lined up almost bow to stern along the quay at terminal one of Dubai's Jebel Ali container port.

Cranes busily tend to their piles of containers. In the nearby Jebel Ali Free Zone, long lines of factories and warehouses wait to receive goods from the arriving boxes. They will either be used in manufacturing or sorted for distribution. Nestlé, Kenwood and Lipton's Tea are among the 6,500 companies with facilities here.

The twin facilities in Jebel Ali have provided much of Dubai's wealth over the past 25 years, maintaining its role as the trading centre for much of the Gulf region. The port handles ships too large for most Gulf states' ports and transfers containers to smaller vessels able to reach places such as Qatar and Kuwait.

Apologies

Dubai will overcome it's financial problems, yet in all my years in the region "rain" remains an imponderable!

Yesterday the City got a very good wash and the Metro continued to run, however rain on the "line" caused the output of this blog to cease at around 1400hrs yesterday.

For this I apologise, but I am sure you realise I have no control over such an event!