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Friday, 30 April 2010

UPDATE 3-Almatis files for bankruptcy, rejects DIC proposal | Reuters

Debt-laden German aluminium firm Almatis B.V. filed for Chapter 11 protection in a U.S. bankruptcy court, two days after its owner Dubai International Capital [DUBAHP.UL] (DIC) urged the company's lenders not to rush into bankruptcy.

Almatis, which has rejected DIC's earlier refinancing proposal, said the primary aim of the bankruptcy plan is to reduce the debt load, implement a workable capital and corporate governance structure.

In an emailed response, DIC said it will vigorously dispute the reorganization plan and the valuation put forward by Almatis' management in court. DIC said the company's Chapter 11 filing was "extraordinary and inexplicable."

Cool reception seen for Dubai World offer | Reuters

Cool reception seen for Dubai World offer | Reuters

The state-owned conglomerate's offer is for a 1 percent interest rate and 1 percent payment-in-kind, a source familiar with the matter said, an upgrade from an opening 1 percent interest rate offer which was rejected as being too low.

A Dubai government spokeswoman said there was no change to the initial terms, which called for a cash interest payment as well as a payment-in-kind but did not outline the interest rates offered.

"The government has not presented a revised offer or improved terms, there has been no change to the original proposal," she said.

Thursday, 29 April 2010

Saudi Arabia’s warning oil exports warning | FT Energy Source |

Saudi Arabia’s warning oil exports warning | FT Energy Source |

Dubai Holding Commercial Delays 2009 Results by Two Weeks

Dubai Holding Commercial Operations Group LLC, the investment company owned by Dubai’s ruler, will delay reporting its 2009 financial results by two weeks to May 16 as it completes consolidation of businesses.

The company has “extensively realigned its operating businesses, undertaken a conservative revaluation of its real estate portfolio, and has conducted a thorough impairment testing exercise across all its projects,” Dubai Holding Commercial said in a statement to Nasdaq Dubai today.END

Dubai Shares Rise Most in 3 Weeks on Dubai World Debt Reports

Dubai’s benchmark index climbed the most in almost three weeks on reports that state-owned Dubai World’s talks with creditors to restructure terms of $24.8 billion of debt are progressing.

Drake & Scull International climbed the most in almost a month after HSBC Holdings Plc rated shares of the Dubai-based construction company “overweight.” Emaar Properties PJSC, the builder of the world’s tallest skyscraper, rose the most in almost three weeks. The DFM General Index increased 1.5 percent, the most since April 11, to 1,739.88 after earlier losing as much as 0.5 percent. The benchmark is down 0.9 percent this week.

“The market is focusing on the fact that Dubai World continues to make progress with talks,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “The market is taking the media reports well because it needs progress and a conclusion, so that these matters can be priced in and then we move on.”

Dubai World Said to Offer Extra 1% Interest in Restructuring

Dubai World offered to pay creditors an additional 1 percent interest upon the maturity of rolled-over loans that are part of a $14.2 billion debt restructuring, a banker familiar with the plan said.

The 1 percent rate would be on top of the 1 percent offered over the loans’ life, said the banker, who declined to be identified because the negotiations are ongoing and private. Banks are asking for different rates on dirham and dollar loans rather than the uniform 1 percent, he said.

A spokesmen for Dubai World and a spokeswoman for Dubai’s Department of Finance declined to comment. The Abu Dhabi-based The National newspaper reported the rate earlier today.

No managerial posts for chairmen of listed firms

The chairman of a listed public shareholding company cannot hold a managerial or/and a managing director post in the company, as per a new corporate governance code coming into effect from tomorrow.

The code also stipulates that one-third of a listed company's administrative board should have independent members. An ex-employee of a company cannot become a board member until two years have lapsed since the resignation.

One of the most important basics of corporate governance is to separate the ownership of a company and its executive administration, said Rami Al Nosoor, financial consultant, Emirates Securities and Commodities Authority (Esca), explaining the terms of the code.

Egypt rebuilds on firm foundations

The Egyptian stock exchange index has risen 20.6 per cent this year. While still short of the peaks it reached in early 2008, the rise comes on top of a robust rally in 2009 and means that the Cairo exchange is one of the best performers in the Middle East and North Africa this year.

“What we thought of as a dead cat bounce in March last year has slowly but surely turned into a decent recovery from the bottom,” says Wael Ziada, head of Egypt research at EFG-Hermes, a regional investment bank.

At the beginning of the year, EFG-Hermes forecast 25 per cent growth in its benchmark HFI index but Mr Ziada says that, with most of this already achieved, he expects the bourse to beat the forecast by “maybe” 5 to 10 per cent.

Dubai’s salvage operation

Eighteen months after Dubai’s property bubble burst, investors who came late to the party are fighting to win compensation for the millions of dollars they ploughed into dream homes which they hoped would generate untold riches.

Hundreds of cases are snaking their way through the complicated and expensive legal system as investors seek compensation for unbuilt properties. For its part, the government is implementing laws to deal with the sums invested in buildings which have been started but not finished.

For some investors, a solution of sorts is at hand. The authorities are moving towards restructuring about $25bn of debts held by Dubai World, a troubled government-owned conglomerate. The plan, if agreed, will clarify the future for thousands of customers of Nakheel, a Dubai World subsidiary.

Citigroup’s Return to Saudi Arabia May Need More Than Alwaleed

Citigroup Inc. is aiming to open for business in Saudi Arabia six years after selling its stake in a bank there. Returning might not be as easy as departing.

Since leaving the country in 2004, the company has said it would like to regain a foothold. Saudi officials, though, are protecting banks from new competition, according to Jean- Francois Seznec, visiting associate professor at Georgetown University’s Center for Contemporary Arab Studies.

“They’re not as in love with U.S. banks as they used to be,” Seznec said by telephone from Riyadh, the Saudi capital. “The competitive environment is really key to this. Citibank was very successful here in the past.”

Dubai Gets JPMorgan, BofA Loan Refinancing to Keep Almatis Unit

Dubai International Capital LLC got a boost in its efforts to keep its Almatis alumina-making unit, with backing for a $685 million debt refinancing that would repay senior lenders including Oaktree Capital Management LLC.

Dubai International is challenging a plan by Oaktree, the biggest of Almatis’s senior lenders, to seize control of Almatis after the German unit violated loan terms last year.

JPMorgan Chase & Co. and Bank of America Merrill Lynch are preparing final term sheets and underwritten commitments for $350 million of senior secured notes and a $50 million revolving credit, Dubai International said in a letter yesterday to the company’s senior lenders.

Wednesday, 28 April 2010

Dubai, Abu Dhabi Bourse Officials Deny Knowledge of Merger Plan

Dubai and Abu Dhabi stock exchange official said they had no knowledge of plans to combine the two United Arab Emirates bourses after Reuters reported that a merger is imminent.

“This is not true,” Rashed Al Baloushi, deputy chief executive officer at the Abu Dhabi Securities Exchange, said by telephone today. “I can’t confirm or deny that a merger may take place in the future because I’m not aware of any such plans.”

Dubai Financial Market PJSC Chairman Essa Kazim said he wasn’t aware of any merger plans. The two bourses are seeking to create a single exchange as income from trading falls, Reuters said, citing two people it didn’t identify.

ConocoPhillips Said to Pull Out From Adnoc Shah Gas

ConocoPhillips, the third-largest U.S. oil company, will announce later today that it’s pulling out of the $10 billion Shah sour-gas project with Abu Dhabi, according to a person familiar with the situation.

Abu Dhabi National Oil Co. will go ahead with the project, said the person, who asked not to be identified because the decision has not been made public yet.

Houston-based ConocoPhillips, which was selected by Adnoc in 2008 to work on the venture, is dropping downstream projects in favor of exploring for oil and gas. Earlier this month, the company pulled out of the proposed Yanbu refining venture with Saudi Aramco.

Saad Investors Agree to Dissolve Islamic Bond Trust

Citicorp Trustee Co. Ltd., trustee for a $650 million Islamic bond sold by a unit of Saudi Arabia’s Saad Trading, Contracting and Financial Services Co., said investors agreed to dissolve the trust after the unit defaulted on the debt.

Citicorp said in August the trust will be closed if holders of the bonds who represent at least 25 percent of the aggregate value of debt outstanding voted for it. The dissolution may allow investors to claim assets used to back the Islamic securities sold in May 2007 by Saad Group’s Golden Belt 1 Sukuk Co. BSC.

Saad Group, the business owned by Saudi billionaire Maan al-Sanea, said in June it was restructuring debt after a “short-term liquidity squeeze.” It owes at least $6.5 billion of syndicated loans to almost 60 banks, according to documents provided by lenders.

Dubai Index Leads Gulf Shares Lower on Europe Crisis, Oil Drop

Dubai shares slid to the lowest level in more than a month, leading declines in the Gulf, after credit-rating downgrades in Europe spurred concern the debt crisis may derail the global recovery and as oil fell.

Emaar Properties PJSC, the developer of the world’s tallest skyscraper, fell to the lowest since March 24. Abu Dhabi-based Aldar Properties PJSC and Sorouh Real Estate PJSC tumbled more than 5 percent after HSBC Holdings Plc downgraded the stocks. Abu Dhabi Commercial Bank PJSC declined as profit dropped. The DFM General Index lost 1.9 percent to 1,714.09, the lowest since March 11. Abu Dhabi’s index retreated 0.9 percent.

Global stocks slid for a second day and the cost to insure against bond losses rose after downgrades of Greece and Portugal fueled concern about sovereign defaults. The MSCI Emerging Markets Index declined 1.8 percent at 2:46 p.m. in Dubai. The gauge has gained 12 percent since a low for the year on Feb. 8 on signs the global economy is recovering.

Aegean to build oil storage in UAE

New York-listed Aegean Marine Petroleum Network Inc. has on Tuesday announced plans to build a three-million-barrel in-land storage facility in the UAE, after signing a 25-year terminal lease agreement with the local authorities.

The new storage facility is expected to be completed within the next 18 to 24 months.

Aegean Marine intends to lease a portion of the facility upon completion to a third party, a move that would generate incremental income on top of the company's core physical bunker supply operations.

DP World shareholders clear way for London listing

Ports operator DP World, a unit of conglomerate Dubai World, said on Tuesday shareholders approved an amendment allowing the firm to seek a listing on the London Stock Exchange.

Voting results from the firm’s annual general meeting were released in a statement to the Nasdaq Dubai bourse.

DP World also said shareholders voted in favour of a buyback proposal for a “limited number” of ordinary shares. It did not give a specific figure.

Middle East telecoms firms may put Skype on mobiles

Skype is talking to telecommunications operators in the Middle East about putting its internet telephone software on the region’s mobile phones, the head of the company’s Middle East operations says.

“We do work with [telecoms companies] to drive new revenue streams and we think we can do the same thing in the Middle East,” Rouzbeh Pasha, the head of Skype for the Middle East and Africa, said on the sidelines of a telecoms finance conference.

“This is what we’re communicating to them that we can work together and ‘future-proof’ their business model.”

Alwaleed Holds Wallet With Buffett as Princely Riches Decline

Prince Alwaleed Bin Talal sits under an almost full moon near a campfire at his rustic retreat in Riyadh, Saudi Arabia. He’s surrounded by a zoo with zebras and giraffes, an artificial lake and a lodge that has an indoor pool, saunas and steam rooms. Three hooded falcons are perched on stands in front of him.

Five young women, dressed in black miniskirts and jackets and orange knee-high boots that match their nail polish, serve clove-and-cardamom tea to Alwaleed and his entourage, which includes his personal physician.

On this evening in late March, the prince perks up in his easy chair as a newscast on a large-screen television behind the campfire reports on a rally in global hotel stocks -- a sign of hope for the billionaire investor who’s trying to revive his slumping fortune, Bloomberg Markets magazine reports in its June issue.

Kuwait plans to near quadruple gas ouptut by 2030

Kuwait plans to produce more than 4 billion cubic feet per day (cfd) of gas by 2030, a top executive at state-owned Kuwait Oil Co (KOC) said on Tuesday, nearly quadruple current output.

The Gulf Arab state does not have enough natural gas to meet power demand and burns a large volume of oil products at power stations. Like its oil exporting neighbours, Kuwait has been slow to develop its gas reserves to meet domestic demand.

Kuwait's pumps around 1 billion cfd of gas from oilfields, and 145 million cfd from gas fields not associated with oil.

Repsol eager to tap north Africa's well of business 'stability'

Executives in the perennially risky oil and gas business have a different concept of "stability" from anyone else, and Antonio Brufau, executive chairman of the energy group Repsol YPF, is no exception.

For Mr Brufau, whose Spanish company has invested heavily in north Africa, the Libya of the quixotic Col Muammer Gaddafi is "a stable country" and "historically the best country for Repsol".

Algeria, once torn by Islamist violence and now in the authoritarian grip of Abdelaziz Bouteflika, president, is "a very stable country".

Demand doubts cloud grand plans for gas

So much uncertainty hangs over the shape of Europe’s future energy sources that grand plans to transform the Mediterranean into a grid of gas pipelines with Italy as the hub risk languishing on the drawing board.

“After this financial crisis we are a bit in the fog,” admits Umberto Quadrino, the chief executive of Edison, a Milan-based utility and Europe’s oldest energy company.

ust two years ago, there was an air of panic over how Europe would cope with a huge deficit in gas forecast over the next decade. Demand was rising, domestic production was falling, old nuclear power plants were to be phased out and coal-fired power stations were seen as a threat to European Union targets to cut emissions.

Solar project has many obstacles to clear

Sunshine has been the lifeblood of the Mediterranean economy, and the solar power industry is expanding, especially in Spain and Portugal.

But the most ambitious solar project is in north Africa. The Desertec Industrial Initiative is a plan to build a vast network of solar power plants and wind farms, covering the desert and stretching for hundreds of miles, and connected to an advanced electricity grid that will carry power generated round or under the Mediterranean sea to feed Europe’s appetite for energy.

Desertec – backed by a coalition of more than 10 big name companies, including Munich Re, the German insurer, Deutsche Bank, utilities RWE and Eon and Siemens – is likely to cost about $400bn (€302bn, £262bn). If successful, the project could supply as much as 15 per cent of Europe’s electricity needs by 2050.

Tuesday, 27 April 2010

UAE stock exchanges merger seen imminent - sources | Reuters

A merger of the United Arab Emirates' two main bourses is imminent, two people familiar with the matter said on Tuesday, with the exchanges seeking to create a single market as trading revenue slumps.

The Abu Dhabi Securities Exchange (ADX) is seen as the driver of a merger with its domestic rival, the Dubai Financial Market (DFM), the sources said.

"The merger is being discussed at the highest level and the outcome is awaited imminently," an ADX official told Reuters, declining to be identified because the deal has yet to be finalised. "It would be good for both markets, instead of them competing against each other. This is a sign of consolidation in the UAE."

Dubai Shares Drop to Week Low on Global Slump, Declining Oil -

Dubai shares declined to the lowest level in almost a week, leading a drop in the United Arab Emirates, as oil fell for a second day and concern deepened that Europe’s debt crisis is spreading.

Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, declined for a second day. Dubai Islamic Bank PJSC, the U.A.E.’s biggest Islamic lender, lost the most since April 19. The DFM General Index slid 0.6 percent to 1,747.06, bringing the drop this month to 5.2 percent. Abu Dhabi’s ADX General Index retreated 0.3 percent to 2,803.16, the lowest in seven weeks.

European stocks fell after German Chancellor Angela Merkel said yesterday she won’t release funds to help Greece shore up its finances until the nation has a “sustainable” plan to reduce its budget deficit. The MSCI Asia Pacific Index declined for the third time in four days, as concern deepened China’s steps to cool its property market will curb growth in the world’s third- largest economy. The MSCI World Index lost 0.6 percent at 5:10 p.m. in Dubai.

Rents drop in Dubai's popular areas.

Rents dropped up to nearly eight percent in several key areas of Dubai in April due to increased supply of residential units and are likely to fall further, property services firm Landmark Advisory on Tuesday.

"Lease rates in most areas, in both the residential and commercial markets, will fall in the coming months, especially for lower quality buildings in the least developed and integrated communities," said Jesse Downs, director of research.

Rents for one-bed room apartments on the Palm Jumeirah dropped 4.2 percent, while the decline was 2.9 percent in Dubai Marina, 4.7 percent in the Downturn Dubai, 5 percent in International City, 6.6 percent in Jumeriah Lake Towers and 7.7 percent in Motor City.

Taqa set for period of retrenchment

Abu Dhabi National Energy Company, better known as Taqa, may be one of the lesser-known vehicles of Abu Dhabi, but it was one of the emirate's most aggressive overseas investors in the years preceding the financial crisis.

Supported by the steady cash flows of its utilities operations - it owns six power and water plants in Abu Dhabi, and is building another one in Fujairah - Taqa borrowed heavily from banks and capital markets, and went on an energy asset buying spree .

Total assets nearly trebled between 2005 and 2008 to $23bn, while its net debt to equity ratio jumped from 2.8 times to 7.1 times in the same period, as the company aimed to become a large international investor in energy with $60bn of assets by 2012.

U.S. and Kuwait's Agility near deal on fraud case

The U.S. government says it is close to a deal with Kuwaiti logistics company Agility (AGLT.KW), which is accused of defrauding the U.S. military in the Middle East on multibillion-dollar supply contracts.

There was no word on Monday on the timing or terms of a possible deal between prosecutors and Agility, the main supplier to the U.S. Army in the Gulf.

But for the first time, the government has acknowledged negotiations toward a settlement.

Dubai Shares to Slide 6% in Next 3 Weeks: Technical Analysis

Dubai stocks may fall 6 percent in the next three weeks as the earnings season ends and after concern about Dubai World’s restructuring pushed the gauge below a technical resistance level in March, Rasmala Investment Holdings said.

The DFM General Index is down 4 percent this month, closing at 1,769.34 yesterday. The measure first fell below 1,870 at the end of March. It may drop to 1,670 by May 15, “where the market will find strong support,” Nabil al Rantisi, senior vice president at Rasmala, said. “Now that the market has reacted to first-quarter earnings, investors will be waiting for clarity on the debt issue and second-quarter earnings.”

Dubai said March 25 it will support Dubai World’s debt restructuring with $9.5 billion as one of the three main state- owned holding companies asks creditors to wait up to eight years to get all their money back. The company is seeking to renegotiate terms on $24.8 billion of debt.

Gulf War battle reignites as Kuwait tries to freeze Iraqi Airways assets

A bitter legal battle between Iraq and Kuwait dating back to the Gulf War has resurfaced in the British courts.

On Sunday evening the first scheduled commercial flight from Baghdad to London for 20 years touched down at Gatwick airport.

Waiting for the plane were lawyers acting for Kuwait Airways. They carried a High Court order issued the same day, freezing the global assets of Iraq’s national airline, Iraqi Airways.

Nakheel signs agreements with trade creditors

Dubai’s troubled real estate developer Nakheel said on Monday it had started to sign agreements with trade creditors as it seeks to forge movement on its parent Dubai World’s $25bn restructuring proposal.

The developer said in a statement that it would pay 40 per cent of trade creditors’ bills in cash with the remaining 60 per cent transferred to a tradable Islamic bond that would pay 10 per cent annual return if 65 per cent of contractors agree.

Government-owned Nakheel declined to comment on the number of agreements signed or the size of its outstanding payments owed to trade creditors but insiders estimate that hundreds of companies still have unpaid invoices that could amount to billions of dirhams in total.

Saudi oil chief fears domestic risk to exports

Saudi Arabia needs to improve the efficiency of its energy use or the kingdom’s oil available for export could fall by as much as 3m barrels per day by 2028, the head of the state oil company has warned.

Khalid al-Falih, chief executive of Saudi Aramco, said domestic energy demand was expected to rise from about 3.4m b/d of oil equivalent last year to about 8.3m b/d of oil equivalent by 2028 – growth of almost 250 per cent.

“We estimate that, through improved efficiency, while maintaining the same economic growth, the increase in energy demand can be cut in half,” Mr Falih said in a recent speech released by Aramco on Monday. “If no efficiency improvements are achieved, and the business is as usual, the oil availability for exports is likely to decline to less than 7m barrels per day by 2028, a fall of 3m barrels per day, while the global demand for our oil will continue to rise.”

Monday, 26 April 2010

Alwaleed Plans Rotana Share Sale Within Two Years (Update1) - BusinessWeek

Saudi Prince Alwaleed bin Talal plans to sell a stake in media company Rotana Holding to the public within two years as the billionaire prince expands his entertainment, music and news business in the Middle East.

“An IPO will be happening in the coming two years,” Alwaleed said in an interview with Bloomberg TV in Riyadh. He added that “we need to brand the company very well before going into an IPO.”

Rotana, which produces Arabic and English television programs and publishes an entertainment magazine, is expanding to meet rising demand for entertainment and news in Saudi Arabia, the Arab world’s biggest economy, and the Middle East. Rotana in February agreed to sell a 9.1 percent stake to Rupert Murdoch’s News Corp. for $70 million as the company seeks television, movie, production and technology expertise.

Nakheel in Starts to Sign Agreement to Pay Creditors

Nakheel PJSC, the unit of Dubai World that is restructuring $10.5 billion of debt, said it started signing settlement agreements to pay trade creditors.

Nakheel will pay 40 percent of the amount owed in cash and an annual return of 10 percent on the recovered claims, the company said in an e-mailed statement today. The remaining 60 percent will be paid in publicly traded securities and creditors will get the cash payment “as soon as an agreement on 65 percent of the total agreed claims” is reached, Nakheel said.

“This is expected to be achieved in the very near future,” the company said. “All indications suggest that this will be a prompt process.”

Islamic Finance Faces Hurdle, Lacks Expertise, U.K. Body Says

A shortage of skilled Islamic scholars and banking officials versed in Shariah-compliant finance is hampering the industry’s ability to develop global standards, said an official at the Islamic Finance Council U.K.

“People from conventional banks need to understand Islamic finance, but Shariah scholars also need to learn more about conventional finance,” Omar Shaikh, a board member of the Glasgow-based Islamic Finance Council, said in a telephone interview in Dubai. “The industry is growing fast globally and this creates challenges associated with standardization.”

Regulators around the world, including Bahrain and Malaysia, are looking for ways to better evaluate risks of the Islamic banking industry and make products suitable for investors globally. Malaysia’s central bank in March said it plans to standardize so-called Shariah-compliant contracts such as those used in real-estate and project financing.

Dubai Shares Retreat as Dubai World Restructuring Hurts Demand

Dubai’s benchmark index fell for the first time in three days as Dubai World’s talks to restructure $24.8 billion of debt dampened foreign investors’ interest in local stocks.

Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, lost the most since April 19. Emirates Integrated Telecommunications Co. dropped 2 percent. The DFM General Index slid 0.7 percent to 1,757.19, bringing the decline this month to 4.7 percent. Abu Dhabi’s ADX General Index retreated 0.4 percent.

“Foreign investors are still reluctant to pull the trigger until the Dubai World issue is resolved,” said Julian Bruce, director of equity sales at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank. “Retail investors were expecting at least some buying momentum on the back of good numbers thus far, but as it failed to materialize they see no reason to hold on to stock and are therefore offloading.”

U.A.E. Minister Lowers Growth Forecast -

The economy minister of the United Arab Emirates on Monday lowered his 2010 economic growth forecast for the country to 2.5% from 3.2%.

"Depending on oil prices, the U.A.E will see up to 2.5% GDP [gross domestic product] growth," Sultan Al Mansouri told reporters on the sidelines of a conference. Mr. Mansouri didn't say why the GDP forecast was lower than the 3.2% economic growth forecast given to reporters earlier this year.

"I'm very positive oil prices will give the U.A.E. a push to utilize these revenues to inject into infrastructure and revitalize the economy," Mr. Mansouri said when asked about oil prices.

Cinven, Dubai World Lead Rebound in Loans for Leveraged Buyouts - BusinessWeek

Cinven Ltd. and Dubai World are leading a surge in loans to finance buyouts, as private equity firms capitalize on rising asset values to quadruple the amount they raise from banks.

Cinven started seeking about 350 million euros ($470 million) of loans to finance its purchase of medical-equipment maker Sebia SA, France’s biggest leveraged buyout in more than two years. Dubai World’s investment unit Istithmar World PJSC is arranging as much as $350 million of staple financing to attract bidders to its Inchcape Shipping Services.

“The combination of lower default rates and the dramatic revaluation in asset prices should pave the way for LBO-related loan and bond volumes to come back from the lows of the past two years,” said Peter Aspbury, London-based head of high-yield research at European Credit Management Ltd., which oversees 12 billion euros.

Emirates NBD Quarterly Net Drops 12%, Tops Estimates (Update1) -

Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, reported a 12 percent decline in first-quarter profit, beating estimates.

Net income dropped to 1.11 billion dirhams ($302 million) from 1.26 billion dirhams a year earlier, the state-controlled bank said in a statement to Nasdaq Dubai today. That beat the median estimate of 711 million dirhams of three analysts surveyed by Bloomberg.

“We have maintained revenues at similar levels to the same period in 2009 and have continued to reduce operating expenses from ongoing rationalization,” Chief Executive Officer Rick Pudner said in the statement. “Credit metrics remain in line with our expectations and our focus on balance sheet optimization has yielded a significant improvement in our funding profile while maintaining strong capitalization levels.”

Shell says Middle East needs to solve gas puzzle | Reuters

The Middle East needs to solve the conundrum which sees it sitting on 40 percent of the world's gas reserves and yet suffering from a supply shortage, a senior executive from Royal Dutch Shell (RDSa.L) said on Monday.

Natural gas demand in the region was growing at such a rate that by 2015, total consumption in the Middle East would be close to that in major European economies, Malcolm Brinded, Shell's executive director for international upstream said in a speech at an industry event.

Middle East gas demand was rising at around 5 percent per year, a similar rate to growth in China, he said.

FEATURE-Oil groups turn focus back to traditional fields | Reuters

The six-metre high red, blue and gold ball recently painted on the side of the Alwyn alpha rig is the largest Total logo in the world -- a sign of Big Oil's growing focus on its heartlands.

Across a 73-metre steel bridge, the Alwyn bravo platform, its blastwalls glistening in the Spring sunshine, processes 100,000 barrels equivalent of oil and gas a day.

Even though it is well past its peak, the North Sea accounts for 25 percent of Total's (TOTF.PA) production and the French oil major's investment in the area is growing.

Mazaya & First Dubai: A Trade Revisited « Alpha Dinar- talking GCC finance

Last week, I wrote about a Merger Arbitrage trade opportunity. The trade involved Mazaya and First Dubai as they are planning on merging together. The trade was simple, short Mazaya, and go long First Dubai, as the spread between the actual prices and the merger price was high.

On the day I wrote the article, Tuesday April 20th, Mazaya’s stock was trading at 118 fils, and First Dubai was trading at 37 fils, making the spread between the market prices and the trade ratio (1 Mazaya share for every 2.75 First Dubai shares) 16%. As of Sunday 25th of April closing prices, Mazaya was trading at 108 fils, and First Dubai trading at 37.5 fils, bringing down the spread to less than 5%. At the beginning of trade today, Monday the 26th April, Mazaya is down 6 fils to 102 fils, making the spread negative. This is a great time to unwind the trade (sell First Dubai and buy back Mazaya and return the “barrowed” Mazaya stock) and take in your profit, which totals to 17.25% in just one week.

Emirates ‘ready’ for IPO
if govt gives go ahead

Emirates airlines, the Middle East’s largest carrier, is ready to launch an initial public offering once it gets go ahead from the Dubai government, its chairman said on Sunday.

Shaikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline, said the final decision on an IPO would have to be taken by the Government of Dubai. “We will always be ready, whenever the government takes such a decision,” he said.

However, Shaikh Ahmed added it would take one year to float the IPO once the decision is taken.

Dubai watchdog wants bigger bite

The regulator of the Dubai International Financial Centre (DIFC) has proposed a fourfold increase in its fines for companies that breach its rules, as well as expanding its powers to sanction minor infractions.

The Dubai Financial Services Authority (DFSA) issued a “consultation paper” yesterday inviting comments on the proposals, which would increase the maximum fine for companies to US$100,000 (Dh367,300) from $25,000. The largest administrative fine for an individual would jump to $20,000 from $5,000.

The proposal was in line with a “worldwide trend to look at penalties”, said Paul Koster, the chief executive of the DFSA. The limits had not been changed since they were implemented in September 2004.

IMF backs Dubai shift to caution

The IMF is supporting Dubai’s shift to a more conservative investment strategy, steering clear of debt-led finance models.

After an “overextension” in the UAE’s property market, a pillar of the country’s rapid expansion for many years, the fund expects the sector to take a reduced role in future growth, said Masood Ahmed, the director of the IMF’s Middle East and Central Asia department.

“Government-related entities were investing with a certain amount of debt, [but] the [Dubai] Government has since signalled it will look to rationalise its future investments,” Mr Ahmed said. “For us, that’s the right approach to take.”

The unassuming oil giant

The shelves in John Watson’s office in San Ramon, California, are filled with mementoes ranging from statuettes from Angola to a dagger from Saudi Arabia and a jar of yellow solid sulphur pellets from a field in Tengiz, Kazakhstan. “I do like putting up trinkets,’’ admits the recently appointed chief executive of Chevron.

Interspersed among them are photographs of his wife of 30 years and two college-aged sons. There is also a picture of him at the opening bell at the New York Stock Exchange. In the corner stands an eclectic assortment of Standard Oil kerosene and oil drums, collected by his wife.

His decorations, he says, are chosen for the memories they evoke of places and times, not their monetary value. Indeed, he jokes that his front room at home is a “low-priced museum”.

2010: Active year for Islamic finance in Kingdom

Judging by the number of deals closed, funds launched and the presence of new institutions, 2010 is turning out to be a very active year for the Islamic finance market in Saudi Arabia.

The Kingdom, in terms of pool of funds, is the largest player in the global Islamic finance market, although its industry, like elsewhere, is subject to traditional bottlenecks, scarcity of human capital resources and underdeveloped market awareness.

There is no doubt that the Saudi market is underpinned by its economic fundamentals - that the Kingdom is the world's largest oil producer and exporter. In addition, while the official foreign reserves held by the Saudi Arabian Monetary Agency (SAMA) are just under half a trillion US dollars, private liquidity in the Kingdom is estimated at $1.2 trillion.

Gulf Islamic banks eye conversion of conventional peers

More banks in the Gulf Arab region may convert to Islamic finance in a bid to tap rising demand for sharia-compliant products and to avoid the heavy investment required to launch new banks.

A source told Reuters this month that Qatari investors are planning to buy a 25 percent stake in Ahli United Bank AUBB.BH (AUBK.KW) from Kuwaiti investors and have plans to convert Bahrain's largest retail bank, which itself plans to take its Kuwaiti unit Islamic.

"Converting to Islamic is compelling in the region. In Kuwait Islamic banks have rapidly won market share from conventional ones," said Sayd Farook, senior consultant at Dar Al Istithmar.

Sunday, 25 April 2010

Dubai Shares Rise to Highest in Week on Emaar Profit, Oil Jump

Dubai’s benchmark index climbed to the highest in a week after Emaar Properties PJSC, the measure’s biggest company by weighting, said quarterly profit more than tripled and oil rose above $85 a barrel.

Emaar, the builder of the world’s tallest skyscraper, rose to the highest since April 15. Dubai Islamic Bank PJSC, the United Arab Emirates’ largest Islamic lender, advanced the most in two weeks. The DFM General Index increased 0.8 percent to 1,769.34, the highest since April 18.

“Emaar’s earnings beat expectations and the stock is looking very cheap and attractive,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. “Global markets and commodities are performing well, helping push up the Saudi market yesterday and Dubai’s index today.”

UAE banks to take Dubai World hit in Q2

United Arab Emirates banks are likely to face the brunt of the Dubai World restructuring impact in the second quarter after the central bank told lenders they are not required to book provisions until there is more clarity.

In a circular dated April 22, the central bank told local banks they "are not required to provision their related exposure to Dubai World".

It said it would "provide further guidance to banks concerning the treatment of Dubai World debt in their books".

'Big money' avoiding Gulf distressed property

Institutional investors are avoiding Gulf distressed properties as few buildings are under one owner and the property landscape lacks sound legal infrastructure and transparency, experts say.

“Certainly there are opportunities here but your do not find a typical distressed asset because you do not find properties controlled by one or two or three owners,” Jurgen Herre, head of Middle East and North Africa for real estate firm Hines, said at Abu Dhabi Cityscape.

Hines last October announced a plan to collect $1 billion from regional funds and investors to create a distressed asset fund focusing on the UAE.

Kotak Securities establishes subsidiary in Dubai International Financial Centre

Kotak Mahindra Financial Services Limited, a part of the Kotak Mahindra Group, one of India’s leading financial conglomerates, today, formally announced the launch of its DIFC operations, reaffirming the Group’s commitment to expanding its Middle East operations.

Kotak Mahindra Financial Services has been incorporated in DIFC as a 100% subsidiary of Kotak Securities Limited, which has been consistently named the “Best Brokerage Firm” in India by Asiamoney since 2006.

The licence awarded by the Dubai Financial Services Authority (DFSA) enables Kotak Mahindra Financial Services to arrange credit or deals in investment; advise on financial products and credit; and arrange custody from its DIFC-based office.

Dubai to prop up shaky UK ventures

A SOVEREIGN wealth fund in cash-strapped Dubai could be forced to plough more than £100m of fresh capital into one of its UK investments.

Dubai International Capital (DIC), an investment vehicle controlled by the ruler of the emirate, Sheikh Mohammed Bin Rashid al-Maktoum, has been asked by a consortium of banks to slash the borrowings of Alliance Medical, the medical technology company it bought for £600m in 2007.

DIC has seen an ambitious foray into European private equity quickly turn sour. It was one of the private equity firms hit hardest by the credit crunch and has had to inject fresh capital into many of its investments, which have struggled because of large debts.

Saturday, 24 April 2010

Qatar To Get Second Supervisory Board Seat At Volkswagen

The Emirate of Qatar is set to obtain a second seat on the supervisory board of Volkswagen AG (VOW.XE) by May 3, 2011 at the latest, said Christian Wulff, the German state of Lower Saxony's head of government and a member of Volkswagen's supervisory board.

The representative can take part in supervisory board sessions as a guest until he is elected.

A seat on the supervisory board will be free by May 3, 2011 at the latest, the date for the company's annual general meeting.

Qatar, which holds a 17% stake in Volkswagen, will have one representative on the company's board for the time being.END

Qatar Telecom Secures $2 Bln Revolving Credit Facility

State-controlled Qatar Telecom, or Qtel (QTEL.DO), said Friday it secured a new $2 billion dual-tranche revolving credit facility to lower its borrowing costs.

The telecom operator's original intention was to raise up to $1.5 billion by approaching its core relationship banks, it said in a regulatory filing to the London Stock Exchange.

"But due to an extraordinary response Qtel received commitments in the amount of $2.75 billion, leading to oversubscriptions of 83%," it said.

Friday, 23 April 2010

Dubai World lenders need not book provisions-paper

United Arab Emirates' central bank said in a circular to local lenders that they do not have to book provisions at the moment for loans to Dubai World [DBWLD.UL], Arabic daily Al Khaleej reported on Friday.

"Banks are not required at the moment to make provisions for loans given to Dubai World," the paper said, adding it will provide banks with direction on how to deal with their debts to Dubai World.

The domestic banking sector has been grappling with the fallout of the global economic crisis and a local property market downturn, as well as the restructuring of Dubai's flagship conglomerate Dubai World.

On March 25, Dubai World unveiled a long-anticipated restructuring proposal, mainly linked to its property units, including Nakheel [NAKHD.UL], to pay roughly $26 billion it owed to creditors.END

Mubadala lines up $2.5bn in loans

Mubadala Development, the Abu Dhabi Government’s strategic investment arm, has lined up US$2.5 billion (Dh9.18bn) in financing as it builds on an increasingly diverse range of funding sources and relies less on government support.

The three-year facility announced yesterday adds to billions of dollars in financing Mubadala secured last year and early this year from banks and investors.

The company established a global medium-term note programme worth about $1.85bn in April last year, and added a euro commercial paper (EPC) programme this February that allows it to borrow money in multiple currencies over short periods from banks around the globe.

Power passes through bloodline

Libya's political system has no formal mechanism for choosing a leader, leaving the door open for improvisation, including the possible hereditary succession by Colonel Muammer Gaddafi's son, Saif al-Islam, writes Heba Saleh .

But "socialist revolutionary" Libya with its quirky system is not the only Arab "republic" where the ancient notion that power naturally transfers from father to son is alive and well. The wider Arab world has several de facto "hereditary republics".

Those Arab states that are not formally monarchies are generally ruled by presidents for life, who lead authoritarian regimes that deliberately prevent the emergence of new generations of politicians.

Emaar Profit More Than Triples on Malls, Hotels

Emaar Properties PJSC, which opened the world’s tallest skyscraper this year in Dubai, said first- quarter profit more than tripled, helped by its shopping mall and hotel units.

Net income rose to 760 million dirhams ($207 million) from 237 million dirhams a year earlier, the developer said in a stock exchange statement today. That exceeded the 336 million- dirham average of six analyst estimates compiled by Bloomberg.

Emaar is focusing on markets such as North Africa and South Asia after property prices in its home market of Dubai slumped by more than 50 percent. Emaar MGF Land Ltd., the company’s Indian joint venture, revived plans to sell 38.5 billion rupees ($870 million) of shares in India in the next three months, Shravan Gupta, Emaar’s executive vice chairman, said on April 8.


The AAR is reporting a continuing surge in rail traffic as signs of recovery become more and more apparent.  U.S. railroads originated 296,599 carloads for the week ending April 17th.  This was 16.1% higher year over year and down 11.6% from 2008.  This was the highest level since December of 2008.  Intermodal traffic totaled 209,903, up 14.6% year over year and down 6.3% versus 2008.
The AAR reports the breadth of the traffic was quite strong:
“Eighteen of 19 carload commodity groups were up from last year, led by a 177.5 percent jump in loadings of metallic ores. Other notable increases included 68.8 percent for metals, 49 percent for motor vehicles and equipment, 46.4 percent for nonmetallic minerals and 34.5 percent for primary forest products. Grain was up 12.2 percent, and coal gained 9.6 percent. The only commodity registering a decline was pulp, paper and allied products, off 6.7 percent.”
Source: AAR

Thursday, 22 April 2010

Turkish Company Interested in Acquiring a Zain Stake?

Various reports suggest that a Turkish company is pondering buying a stake in Zain (the mother company) from Khorafi (major shareholders). It is unusual that this should arise while Zain and Bharti haven’t yet closed their deal yet. If rumors are true, then I believe that the Turkish company will most likely be Turk Telekomunikasyon (TTKOM) as locals are talking about an arab connection (TTKOM is 55% owned by Oger). It is worth mentioning that prior to the Zain Africa sale, Zain was going to sell a 46% stake in the mother company. Lets wait and see.

Dubai Shares Rise on Optimism Drop May Be Overdone on Earnings

Dubai’s benchmark index advanced the most in almost two weeks as investors bet corporate earnings will beat estimates.

Air Arabia rose the most in more than four months after the Middle East’s largest low-cost airline was raised to “overweight” at HSBC Holdings Plc. Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, advanced to the highest level in a week. The DFM General Index gained 1.4 percent, the most since April 11, to 1,754.96. The gauge lost 3.4 percent this week.

Dubai’s measure has declined 4.8 percent since the end of March, giving the 32 listed companies price-earnings multiples of 6.11 times, according to data compiled by Bloomberg. That compares with a price-earnings ratio of 12.75 for the MSCI Emerging Markets Index.

State-owned Qatari fund set for more deals-analysts

Wealthy and seemingly unscathed by the global crisis, Qatari real estate firm Diar is expected to invest boldly and hunt for big stakes while other Gulf sovereign investors follow a more conservative approach.

Diar, the property arm of the Gulf state's sovereign wealth fund Qatar Investment Authority (QIA), recently embarked on an aggressive investment strategy, buying stakes in assets ranging from luxury hotels to global utility firms. [ID:nLDE63F08I]

Analysts and industry experts say the relative newcomer to the investment game will seek bigger stakes than other Gulf sovereign wealth funds, reaching beyond its core real estate remit to increasingly consider other international deals.

Dubai World Interest Rate Offer Likely to Hurt Local Banks

Dubai World’s offer to pay creditors interest of 1 percent on new loans as part of a plan to restructure $14.2 billion of debt, or a fifth of the market rate, will hurt local lenders more than foreign banks, analysts say.

“The cost of funds for local banks is higher because they pay a higher rate on deposits,” Germaine Benyamin, an analyst at Al-Futtaim HC Securities Co., said in a phone interview from Dubai today. The impact of the lower interest rates “would be lower on foreign banks than local banks.”

Dubai World, the state-owned holding company, is offering to pay creditors 1 percent interest on new loans as part of a restructuring plan, a banker familiar with the plan said April 15. Banks are reluctant to accept the new rate as it is lower than the market rate of about 5 percent and would force them to book impairment provisions, two bankers said that day.

Iraq’s Recovery Fuels Profits as Life Returns to City Streets

Customers heading for a Baghdad branch of Dar Es Salaam Investment Bank know the drill. You walk through the entrance and heavily armed guards stop you. You get body-searched at least twice. And your phone is taken away before you reach a teller. Mobile phones, of course, can trigger bombs or send a signal to armed accomplices.

Yet Dar Es Salaam, known as DES, is thriving as Iraq begins to show signs of life. Profits have grown from about $600,000 in 2004 to more than $16 million. HSBC Holdings Plc, the giant international bank that bought 70 percent of DES in 2005, feels so confident that it may put its own brand on the banks.

“We think the timing is right,” says James Hogan, HSBC’s country manager. “Iraqis are starting to reconnect to the outside world.”

Oman fund buys 12.6 pct stake in Petrovietnam unit

Oman Investment Fund has acquired a 12.6 percent stake in Petrovietnam Insurance Co PVI.HN, the insurance arm of Vietnam's state oil and gas group, for $42.4 million, a statement said on Thursday.

The deal makes the fund, run by the government of Oman, a strategic investor in the Hanoi-based insurance firm, the joint statement sent to Reuters said.

The deal allows PVI, Vietnam's second-largest non-life insurance firm in terms of direct insurance premiums, and Oman Investment Fund "to co-invest in Vietnam and globally leveraging respective strengths", it said.

Abdullahs face legal challenge

A legal case filed against the Abdullah brothers, who own the majority of the troubled jewellery company Damas International, will proceed after a judge threw out a motion to dismiss it on jurisdictional grounds.

Amwal AlKhaleej, a Saudi private equity company, sued the Abdullah brothers and a company they own, Damas Investments, in December for more than US$22 million (Dh80.79m) after the brothers allegedly did not pay for shares they agreed to buy two years ago.

The Riyadh-based firm alleges that the brothers agreed to buy more than 22 million of its shares at $1 a share in an agreement dated June 16, 2008, just two weeks before Damas was scheduled to make a public offering of 25 per cent of its stock.

MGM Mirage seeks to rebrand as MGM Resorts Int'l

MGM Mirage is asking shareholders to approve changing its name to MGM Resorts International, as the company looks to emphasize the scope of its brand.

The company, known mostly for its Las Vegas casinos, said Wednesday that the new name better represents its global presence. MGM and its joint venture partner in Macau expect to launch an IPO on the Hong Kong market later this year, and the company is developing Bellagio, MGM Grand and Skylofts hotels in Dubai that are expected to open in 2013.

"We believe this change will positively impact how customers, investors and the public perceive our collective strengths and abilities," Chairman and CEO Jim Murren said in a statement.

Middle East ETFs Head-To-Head: GULF vs. MES

After the Dubai debt crisis late last year, many investors feared that the Gulf boom was quickly coming to an end. But obituaries written for the Gulf economy turned out to be premature, as Gulf States such as the UAE, Qatar, and Bahrain have bounced back from that scare to post solid returns in 2010. Although Dubai continues to struggle as it flushes out the excesses of its property boom, neighbor Abu Dhabi is expected to grow its GDP by 3.8% this year, while Qatar is expected to have a world best 19.2% GDP growth in 2010. These forecasts have been boosted by increased oil prices, which have more than doubled from their lows last April. The soaring price of oil has helped to fuel the economies of the Gulf region while Qatar looks to benefit from expanded production of its vast natural gas reserves which could stimulate the region for years to come. But the improved economic outlook is also attributable to strength in domestic demand and non-energy sectors of the economy.Currently, there are two primary ETF options available to investors seeking exposure to this area of the world: the Market Vectors Gulf States Index ETF (MES) and the WisdomTree Middle East Dividend ETF (GULF). Below we highlight the main differences between these two ETFs, including comparisons of country exposure, expenses, and risk profile. While MES and GULF are similar in many ways, there are some nuances that may make one more appropriate for certain investors than the other (see more head-to-head ETF comparisons here).

IMF forecasts 4.5% growth in Middle East

The International Monetary Fund has forecast that economic growth in the Middle East and North Africa region will reach 4.5 per cent this year, driven by higher commodity prices and government spending.

But the IMF warned on Wednesday that there was “substantial uncertainty about this outlook”, including the risk of fallout from debt problems of Dubai Word, the emirate’s government-owned conglomerate that is seeking to restructure debts of about $23bn.

The fund said the economic impact of Dubai World had been relatively limited so far but cautioned that its “full impact may not be felt for some time”.

Mixed outlook for Gulf property

The Cityscape real estate conference held earlier this week in Abu Dhabi was a far cry from the whirlwind of mega-development launches and off-plan investments that used to be the norm at previous such events in the Gulf.

Even Abu Dhabi, which for several years has been plagued by shortages in both commercial and residential real estate, has been knocked somewhat off course, and attendees at Cityscape Abu Dhabi said the subdued mood showed little sign of lifting.

“I don’t think Abu Dhabi expected to be hit as hard as it was,” says Ian Albert, regional director of Colliers International, the consultancy. “The proximity of Dubai is pressing down prices and rents, and there looks like there will be an office oversupply soon.”

Role of sharia boards needs modernisation

It is an extraordinary sight. A sharia-compliant finance company is arguing in an English court that it should not have to make good on one of its financial obligations because the obligation was never Islamic.

Yet that is exactly what Kuwait’s The Investment Dar company is arguing as it tries to avoid paying Lebanon’s Blom Bank a return on deposits placed with it.

TID’s argument is that, since its articles of association permit it to engage only in business that is sharia-compliant, if the way in which it calculated the returns to Blom breached sharia law, the contract with Blom is void. As the lawyers say, TID would have acted ultra vires – beyond its powers – in entering the transaction.

Wednesday, 21 April 2010

UAE bad loan provisions up 2.4 pct in | Reuters

Banks in the United Arab Emirates saw provisioning levels for non-performing loans rise 2.4 percent in March compared to the previous month to reach their highest level since at least December 2008, data showed.

UAE banks' problem debt provisions stood at 34.4 billion dirhams ($9.37 billion) compared to 33.6 billion at the end of February, the central bank's UAE banking indicators showed on Wednesday.

The domestic banking sector has been grappling with the fallout of the global economic crisis and a local property market downturn, as well as the restructuring of Dubai's flagship conglomerate Dubai World [DBWLD.UL].

Banks' combined loans climbed to 1022.0 billion dirhams at the end of March, from 1017.5 billion in February. Bank deposits rose to 967.0 billion dirhams, from 958.3 billion at the end of the previous month.END

Arqaam Capital updates you on the MENA equity markets

Tabreed to Consider Alternatives on Bond Payments

National Central Cooling Co., the United Arab Emirates-based refrigeration company, said the board will this month consider “alternatives” to annual payments on 1.7 billion dirhams ($463 million) of Islamic bonds.

Board members will meet on April 25, it said in a statement to the Dubai bourse today, without providing details. The company, known as Tabreed, said March 8 it is seeking approval from shareholders to renegotiate terms on a $200 million floating-rate note and the local currency-denominated convertible sukuk maturing in 2011.

Tabreed is among Gulf Arab companies seeking to restructure debt after the global economic crisis dried up financing and brought a property boom to a halt. Dubai World, one the emirate’s three main state-owned holding companies, is negotiating with lenders to restructure $24.8 billion of debt after roiling global markets by proposing a freeze on loan repayments in November.

IMF Says Impact of Dubai World May Not Be Felt for ‘Some Time’

The full impact of Dubai’s $24.8 billion debt postponement on the region’s economies may not be felt for “some time,” the International Monetary Fund said.

“In particular, a possible re-pricing of quasi sovereign debt could have a lasting effect on financial systems, corporate sectors, and, more generally, economic activity in the area,” the IMF said today in its World Economic Outlook.

State-owned Dubai World’s announcement in November that it planned to restructure debts, following defaults by two Saudi Arabian groups, has made banks more reluctant to lend and disrupted bond sales across the Middle East. That’s slowing recovery from last year’s recession, caused by slumps in property and oil prices and global trade.

Saad Group Hasn’t Reached Accord With Banks on Debt

Saad Group, the business owned by Saudi billionaire Maan al-Sanea that is seeking to delay payments on at least $6.5 billion of debt, hasn’t reached an agreement with its creditors to restructure the loans, Chief Financial Officer Maan al-Zayer said.

“I would tend to say that banks lend money, whether it’s to Saad, Algosaibi or any other entity, and banks will be able to get their money back in due course,” al-Zayer told reporters in Riyadh today during a conference. Saudi courts are the best alternative to settle the debt dispute between banks and stakeholders, he said.

Saad Group, originally a contracting company that has diversified into real estate, education, finance and health care, said in June 2009 that the Al-Khobar-based company was restructuring debt after a “short-term liquidity squeeze.” It owes at least $6.5 billion to almost 60 banks from five loan syndications, according to documents provided by lenders.

Nakheel Said to Offer Trade Creditors 10% Return on New Bonds

Nakheel PJSC, the unit of Dubai World that is restructuring $10.5 billion of debt, plans to pay an annual profit of 10 percent on Islamic bonds it seeks to issue to trade creditors, said two people familiar with the proposal.

The deal is conditional on trade creditors representing at least 95 percent of the value of all claims agreeing to the proposal, according to the people who declined to be identified because the plan hasn’t been made public. Nakheel plans to issue the five-year bonds in July and list the securities on Nasdaq Dubai.

If trade creditors, including contractors and suppliers, don’t accept the terms, they can appeal to a tribunal established last year to resolve Dubai World related disputes, one of the people said.

DMCC's DSAM Kauthar Commodity Fund named 'Best Fund-of-Funds'

DMCC's DSAM Kauthar Commodity Fund named 'Best Fund-of-Funds' - Business Intelligence Middle East - - News, analysis, reports

In recognition of its outstanding performance, Dubai Shariah Asset Management (DSAM) Kauthar Commodity Fund was named ‘Best Fund-of-Funds’ at the annual Falaika Islamic Fund Awards.

This announcement was made today by Dubai Multi Commodities Centre (DMCC). The annual Falaika Islamic Fund Awards recognises top performers in the global Shariah-compliant investment marketplace.

The DSAM Kauthar Commodity Fund, the first Shariah compliant fund-of-funds of its kind, generated a net return of 41.19% in 2009, leading both the conventional and Islamic fund industries. This is the third award for DMCC’s industry leading fund this year.

Dubai World Unit Said to Arrange Loans for Inchcape Acquisition

Dubai World’s investment unit Istithmar World PJSC is arranging as much as $350 million of loans to attract bidders to its Inchcape Shipping Services, two people familiar with the matter said.

The so-called staple financing will be available for any bidder for Inchcape Shipping and comprises senior leveraged loans and junior debt due in about six and eight years, said the people, who declined to be identified because the information is private.

Bank of America Merrill Lynch and Royal Bank of Scotland Group Plc are arranging the financing, the people said.

Kingdom Holding First-Quarter Profit Advances 50%

Kingdom Holding Co., the investment company owned by Saudi billionaire Prince Alwaleed bin Talal, said first-quarter profit advanced 50 percent on revenue growth from hotels and the performance of investments.

Net income rose to 75.2 million riyals ($20.1 million), or 0.02 riyal a share, from 50.2 million riyals, or 0.01 riyal, in the year-earlier period, the Riyadh-based company said in a statement to the Saudi bourse today.

“Subsidiaries and investments performed well with resilient revenue growth delivered across our hotels and real- estate investments,” Prince Alwaleed said in a separate e- mailed statement.

Pssst... Saudi Arabia Needs $60 Oil Just to Break Even These Days

Talk about getting comfortable with the multi-year commodities super-spike we've had...

Saudi Arabia's National Commercial Bank has disclosed that its government requires $60 just to break even on its budget these days.

Yet they're actually aiming for $75 oil in 2010, which will provide them with a healthy $24.3 billion budget surplus.

Qatari firm vows to revive Oman project

Qatari investment company Bin Muhanna Holding Group yesterday announced its participation as a main partner in the major Blue City project being set up in Oman by the UDM Group and Bahrain-based A A J Holding.

Bin Muhanna Holding chairman Dr Najeeb bin Mohammed Al Noaimi said the firm were happy at becoming part of the major project.

"We will now approach international banks, investors and insurance companies in order to restore confidence in this project, which has been facing obstacles and hindrances, and realise its objectives.

Tuesday, 20 April 2010

Q-tel, Vodafone Qatar to Join Qatar’s Rebranded Index

Qatar Telecom QSC, the country’s biggest phone-service provider, and Vodafone Qatar QSC, will be included in Qatar’s rebranded benchmark index starting May 6 as the bourse seeks to boost volumes.

Qatar’s DSM20 Index will be renamed the QE Index following the rebranding of the Qatar Exchange in June, the exchange said in a statement on its Web site today. The QE Index will be calculated based on free-float market value and the average daily traded value.

“The overall enhancements to the current index are beneficial to public investors in Qatar and will contribute to the development of the liquidity of the Market,” Andre Went, chief executive officer of the Qatar Exchange said in a statement posted on the local bourse.

Islamic banks caught between two worlds

Corporate restructurings were until recently relatively rare in the oil-rich Arab Gulf, but the experience is particularly novel for investment companies and banks that adhere to Islamic, or sharia, law.

The Islamic finance industry grew exponentially in the years preceding the financial crisis – particularly in the Middle East – boosted by increasing religious awareness and an inflow of billions of dollars of oil revenue into the Gulf. The industry now holds total assets of about $950bn, according to Moody’s.

Yet it has been hit by the economic downturn, which caused several high-profile Islamic investment banks to default and restructure their operations and debt.

Restructurings in the Gulf are already complicated by underdeveloped legal frameworks, a lack of transparency, inexperienced commercial courts and a “head in the sand” approach, bankers and lawyers say. Adherence to sharia adds another layer of complexity to the process.

Dewa Pricing Pressures Dubai World Debt Talks

Pricing of a benchmark bond by Dubai Electricity & Water Authority is putting Dubai World's negotiations to reschedule almost $24 billion of debt under pressure, bankers familiar with the matter said.

The utility, or Dewa, earlier this month sold a $1 billion bond to yield 1.05 percentage point over comparable Dubai sovereign debt. The company will pay a semiannual coupon at a rate of 8.5% to bond holders until the instrument reaches maturity in 2015.

The interest rate for the Dewa bond is much better than Dubai World's recent offer to creditors of the conglomerate and of Nakheel, its property subsidiary. Dubai World had offered a 1% interest rate on some of its outstanding debt in a restructuring proposal to 97 creditors now being considered by banks, according to bankers aware of the talks.

Qatar Shares Rise, End 4 Days of Drops, as Banks Beat Estimates

Qatar shares advanced for the first time in a week after quarterly earnings at Commercial Bank of Qatar QSC and Doha Bank QSC beat analyst estimates. Kuwait’s measure dropped for a second day.

Commercial Bank of Qatar, the country’s second-largest bank, rose the most since April 12, while Doha Bank gained the most in almost a month. Qatar National Bank SAQ, the company with the highest weighting on the nation’s benchmark index, advanced for the first time in four days. The DSM 20 Index increased rose 0.7 percent to close at 7,549.55.

“Commercial Bank of Qatar and Doha Bank in particular had good earnings,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “They are the market’s most liquid names and tend to determine a direction for the market.”

Saudis Tighten China Energy Ties to Reduce U.S. Dependence

Li Wei, a Chinese diplomat in Riyadh, had only just seen off a Ministry of Commerce delegation to Saudi Arabia this month when he started preparing for another Chinese governmental visit in two weeks.

“Every month we have delegations coming to Saudi Arabia,” said Li, who works in the Chinese Embassy’s commercial section in the Saudi capital. “We are too busy.”

China, the world’s second-largest oil consumer, and Saudi Arabia, holder of about a fifth of global crude reserves, are forging ever closer ties as the Persian Gulf kingdom responds to a Chinese drive to feed its rising energy needs. China in November overtook the U.S. as the main buyer of Saudi oil, and Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are investing in refinery and petrochemicals projects in China.

Damas Appoints Nine New Board Members After Probe

Damas International Ltd., a Dubai- based jewelry retailer, named nine new board members after its previous board resigned on orders from the market regulator for failing to prevent the unauthorized withdrawal of funds.

Damas was fined as much as 2.57 million dirhams ($700,000) on March 21 by the Dubai Financial Services Authority and its board asked to resign after an inquiry found its owners, the Abdullah brothers, withdrew about 365 million dirhams without board approval.

Abbas Ameeri, Abdulla Almazroei, Anan Fakherddin, Ehsan Abbas, Ibrahim Belselah, Nicholas Hegarty, Simon Copleston, T N Pratap and Tariq Ali were appointed to the board after getting shareholder approval, the company said in a statement to Nasdaq Dubai today. Damas may also list shares in dirhams, U.S. dollars or both, according to the statement.

Dubai’s Economy Contracted 2.5% in 2009, Preliminary Data Show

Dubai’s economy contracted 2.5 percent last year after expanding 5.7 percent in 2008, according to preliminary government estimates in a document obtained by Bloomberg News.

The Dubai Statistics Centre declined to comment on the data as economic growth rates for 2009 have not been made public yet.

Dubai and its state-owned entities, which borrowed more than $100 billion to transform the city into a global tourism, trading and services hub, suffered as international credit dried up and real estate prices plummeted by 50 percent from their peak. A slowdown in global trade also led to the contraction in the economy.

Swiss bank asks DIFC Court to reject claim for investment loss

A subsidiary of Switzerland’s Bank Sarasin yesterday asked a Dubai court to strike down a US$225 million (Dh826.4m) claim that it misrepresented investments to three members of a prominent Kuwaiti family.

The request came during the first hearing of a case lodged in the Dubai International Financial Centre (DIFC) Courts late last year.

Rafed al Khorafi, the chairman of AM Al-Khorafi Establishment in Kuwait, along with his wife and mother, claimed investments made in 2007 were presented as ones that could “never lose money”, but resulted in $75m of losses, court documents show.

Oaktree, Highland Said to Object to Mauser Profit Calculations

Oaktree Capital Management LLC and Highland Capital Management LP demanded a German packaging company owned by Dubai’s ruler stop using debt buybacks to boost profit, two people familiar with the matter said.

The funds and two other investors that own more than 66 percent of the company’s 700 million euros ($943 million) of senior debt also demanded Mauser Group restate past financial figures to remove gains that helped it meet the terms of its debt agreements, said the people, who didn’t want to be identified because the talks are private. Mauser is owned by Dubai International Capital LLC.

Lenders are insisting that companies meet debt covenants rather than grant waivers like they did in the past as the economy recovers. Creditors last year forgave 7 billion euros of senior loans as part of restructurings to keep speculative-grade borrowers afloat, according to Fitch Ratings.

Gas Cartel Too Soon in the Making

Proponents of an OPEC-style cartel for gas would kill the very market they aim to control.

The Gas Exporting Countries Forum met Monday in Algeria. The latter's energy minister says he wants gas to price at parity to oil. In the U.S., that would mean gas costing as much as $13.50 per million British thermal units, triple today's price and close to previous hurricane-inspired spikes. Gas exporters are hurting because liquefied natural gas, which allows cargoes to be shipped independently of pipelines, now accounts for 10% of global supply. That enables greater competition. Also, America's "shale gas" revolution, coinciding with recession, has left the market oversupplied.

Yet OPEC's experience carries three lessons for any budding gas cartel. First, there is the cost of coordination. OPEC works because Saudi Arabia is prepared to invest in, and carry the opportunity cost of, spare capacity. Who would do this for gas is unclear. Russia's record of investment wouldn't foster much confidence. Qatar, meanwhile, can withstand lower gas prices anyway

Higher prices, meanwhile, encourage competing supplies. The 1970s oil shocks made Alaska, Mexico and the North Sea viable oil provinces. OPEC's market share, then two-thirds, is 40% today. And higher prices earlier this decade made U.S. shale gas viable.

Perhaps the biggest problem, though, is that you can't influence global prices by controlling marginal supply without a truly global gas market. The latter, facilitated by LNG cargoes, remains some way off.

Imposing a cartel now would be a big setback to that trend. It would also undermine gas's role as a "bridge" between fossil fuels and renewable energy. Trying to establish a cartel now would kill the opportunity for forming one in the future, when it might indeed be viable.END

Prince Alwaleed:Citigroup CEO Has His 'Firm Backing'

Saudi Arabian billionaire Prince Alwaleed Bin Talal, Citigroup Inc.'s (C) biggest individual shareholder, said Monday that Chief Executive Vikram Pandit has his "firm backing," and congratulated the company on posting a first-quarter net profit of $4.4 billion.

"Citigroup has demonstrated its ability to overcome the recent economic obstacles," Alwaleed said in an e-mailed statement.

"I commend Citigroup's performance and the management of Citigroup under the leadership of Pandit who has my firm backing," he said.

Russia, Qatar agree on Yamal gas joint project

Russia and Qatar have agreed to work together to develop the gas reserves of Russia’s Arctic Yamal peninsula, the two sides said in a joint statement yesterday.

“The parties have reached an agreement to further develop their cooperation through joint implementation of oil and gas projects in Qatar and Russia, including the integrated project of development of natural gas reserves of the Yamal peninsula, in third countries, as well as through scientific research”, said the statement, issued at a meeting of major gas producers.

The Deputy Prime Minister and Minister of Energy and Industry, H E Abdullah bin Hamad Al Attiyah, and Russian Energy Minister Sergey Shmatko signed the statement.END

Gulf states run the risk of duplicating strategies

What is the best business to be in in the Gulf? “Artists’ impressions,” quipped an analyst as we discussed the pros and cons of the region’s swathe of mega-projects.

With an eye on the future, Abu Dhabi, Bahrain and Qatar have developed their 2030 visions, all intended to diversify economies and create jobs for growing, young populations. Kuwait, which lags the pack, has gone for 2035, while Saudi Arabia has its economic cities and a five-year $400bn infrastructure plan.

And where there is a mega-project, there is the artist’s impression of what the future holds – sketches of towering office blocks, villas, marinas and ports. Often, the images are accompanied by statistics highlighting the benefits the developments are intended to bring.

Qatari flagship moves into unique space

In February, Qatar Financial Centre, one of the gas-rich state’s flagship projects, shocked regional banking circles by culling staff in a strategic overhaul.

For many observers, the move, which saw a third of the QFC’s about 100 staff made redundant, was counterintuitive. Many saw the financial troubles in the wider region as providing an opportunity for the Qatar centre, which enjoys the backing of one of the region’s most cash-rich government and is supported by a doubling in gas exports.

From mergers and acquisitions to debt issuance, Doha has provided a steady set of fees for investment bankers in Dubai, where a real estate crash and debt problems continue to hamper business prospects.

Monday, 19 April 2010

Nomura Sees Value in Dubai Bonds, Recovery in Economy

Dubai government bonds and credit default swaps offer “value” after a proposal by Dubai World to restructure $24.8 billion of debt and renewed appetite for quasi-sovereign securities, according to Nomura Holdings Inc.

“Market pricing of Dubai’s sovereign risk does not reflect current fundamentals, and we therefore recommend exposure either through CDS or government bonds,” Ann Wyman, head of emerging market research Europe at Nomura, wrote in an e-mailed report dated April 16 and received today. “We continue to see value.”

Dubai World, one of the emirate’s three main state-owned holding companies, and its property unit, Nakheel PJSC, are seeking to renegotiate their debt after the global credit crisis battered Dubai’s real estate market and left companies unable to raise new funds. Dubai World asked its almost 100 creditors on March 25 to roll over debt into two new loans of five-year and eight-year maturities.

UAE telecoms group Du sets $273 mln rights issue

Dubai-based telecoms provider du DU.DU will pursue a 1 billion dirham ($272.3 million) rights issue to fund infrastructure improvements beyond 2010, it said on Monday.

Chief Executive Officer Osman Sultan said during a call with reporters that the issue was already fully subscribed by its major shareholders and will meet the financial needs of the company for three to four years.

Du had previously said it has an investment programme exceeding 2.2 billion dirhams ($599 million) for 2010. Sultan said that the 1 billion dirhams rights issue would allow for financing beyond this year.

Dubai Benchmark Leads Gulf Shares Lower on Global Markets, Oil

Dubai shares fell to the lowest in a month, leading declines in the Gulf, as global markets retreated after calls for regulatory probes on Goldman Sachs Group Inc.’s widened and as oil dropped.

Emirates Integrated Telecommunications Co. declined the most this year after it announced plans to raise money by selling shares. Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, retreated for a fifth day. The DFM General Index lost 1.7 percent to 1,746.02, the lowest close since March 18. Saudi Arabia’s Tadawul All Share Index dropped 0.2 percent at 1:34 p.m. in Riyadh.

Asian stocks declined the most in two months, while commodities and currencies slumped, after the U.S. Securities and Exchange Commission sued Goldman Sachs for fraud and China curbed property loans. European stocks also fell as the U.K. and Germany probed Goldman and parts of Europe’s airspace remained shut after a volcanic eruption in Iceland grounded tens of thousands of flights. The MSCI World Index lost 0.8 percent.

Qtel AGM Approves 70 Percent Share Face Value Cash Dividend

The Annual General Meeting of Qatar Telecom (Qtel) QSC today approved the recommendation of the Board of Directors to issue a total annual cash dividend of QAR 7 per share. This represents 70 percent of the share face value.

Addressing the general assembly, His Excellency Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani, Chairman, Qtel, discussed the reasons for Qtel’s success in a challenging year, and underlined his confidence in the company’s strategy for growth and development.

His Excellency Sheikh Abdullah said: “2009 was a year of clear achievement for both Qatar and for Qtel. While the world experienced a profound economic crisis, Qatar continued to stride forward steadily, guided by the wisdom of its leadership and its clear vision for the future.”

Saudi Arabia set to establish civil nuclear energy centre

Saudi Arabia , the world's largest oil supplier, is set to establish a civil nuclear and renewable energy centre to help meet demand for power as it pushes forward with economic expansion plans.

The Saudi press agency said at the weekend that the centre, the King Abdullah City for Nuclear and Renewable Energy, would be based in Riyadh and would be led by Hashim Abdullah Yamani, a former commerce and trade minister.

While discussions have focused on civil uses of the technology, analysts note that Saudi Arabia and other Arab Gulf states do not want to lag further behind Iran and Israel in developing nuclear technologies.