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Tuesday, 16 February 2010

Standard & Poor's assigns ratings to Global GCC Funds

Standard & Poor’s Fund Services announced today that it has assigned an A fund management rating to two Global GCC Funds: Global GCC Large Cap Fund and Global GCC Islamic Fund.

Shahid Hameed, head of asset management at Global Investment House, manages both the funds. Hameed is supported by an experienced team of eight analysts in Kuwait, with further resources in Jordan and Egypt. The team is split by sectors and is responsible for $1.6bn across 11 mandates.

Both funds aim to outperform the respective MSCI indices by investing in 20-25 high conviction stocks trading at significant discount to intrinsic value. Like many funds in the region, there is considerable flexibility in portfolio construction.

Kuwait Stocks Gain on Zain in Longest Winning Streak Since 2006

Kuwait shares posted their longest winning streak in more than three years as Zain, the country’s biggest telecommunications company, said it expects a return of as much as $5 billion from the sale of its African assets.

Zain, one of the heavy weights in Kuwait’s benchmark index and part-owned by Kharafi Group, rose the most in seven months. Global Investment House KSCC, an investment bank, jumped to its highest level this year as it said it’s an adviser in the Zain deal. The Kuwait Stock Exchange Index rose 0.8 percent to 7,440.6, bringing the 11-day gain to 6.1 percent. It’s the measure’s longest winning streak since June 2006.

“Kuwait is gaining as a market because of the heavy weightings of the Kharafi companies in the index which are benefitting from the Zain deal,” said Yazan Abdeen, a fund manager at ING Investment Management (Dubai) Ltd.

Zain Sees $5 Billion Profit From Africa Unit Sale

Zain, Kuwait’s biggest phone company, said it expects a return of as much as $5 billion from selling most of its African assets to Bharti Airtel Ltd.

Bharti, South Asia’s biggest mobile-phone company, and Zain said yesterday they entered into exclusive talks under which the Indian company would buy the African assets for $10.7 billion. Bharti will pay $10 billion when the deal is completed and the rest a year later, Zain said in a statement on the Kuwait Stock Exchange Web site today. The transaction excludes Zain’s operations in Sudan and Morocco.

“Revenue from the unit sale will contribute to Zain’s second-quarter results,” the statement said.

ADIB to Raise Stake in Egypt’s National Bank to ’Above 50%’

Abu Dhabi Islamic Bank, the United Arab Emirates’ second-biggest bank complying with Islamic rules, plans to raise its stake in Egypt’s National Bank for Development to “above 50 percent,” Chief Executive Officer Tirad Mahmoud said.

“We plan to increase our stake above 50 percent after NBD becomes fully compliant with Islamic Shariah banking guidelines,” Mahmoud said in an e-mailed statement today. “Much progress has been made and we are satisfied with that.”

Abu Dhabi Islamic plans to raise the stake in National Bank to 51 percent from 49 percent, Emirates Business 24/7 reported earlier today, citing Mahmoud.END

Western sukuk left floundering after Dubai: lawyer

The market for issuance of sukuk in the UK and Europe is struggling to reignite in the aftermath of the Dubai World standoff and a recovery in more traditional forms of financing, a specialist lawyer said on Monday.

Farmida Bi, a partner at the Norton Rose in London, said the pipeline for Islamic bonds in the UK, the most sophisticated Islamic financial market in Europe, was "not fantastic."

"Twelve months ago all sorts of UK and European corporates were talking to us about tapping the Islamic markets because either their conventional sources had dried up or they were concerned they may dry up," Bi said at the Reuters Islamic Banking and Finance Summit on Monday.

Bahrain's AUB to acquire 40 pct of Libyan bank

Bahrain's Ahli United Bank will acquire 40 percent of the Libya's United Bank for Commerce & Investment, according to a statement from the Kuwait bourse on Tuesday.

Ahli United Bank received the approval of each of the central banks of Bahrain and Libya to acquire 40 percent of the bank by increasing its capital, the note said.

UBCI was founded in 2007 through the merger of three national banks in Libya, according to the bank's website.END

Dubai Drives Hard Bargain for Banks -

Dubai Drives Hard Bargain for Banks -

For Dubai World's creditors, indignity piles upon indignity. News that the troubled state-controlled conglomerate plans to repay its lenders a meager 60 cents for every U.S. dollar they are owed is yet another blow for lenders who, until four months ago, assumed Dubai World's debts came with an implicit sovereign guarantee.

Dubai World is seeking to reschedule $22 billion of debt. But while the banks may be furious, they have such a weak negotiating hand that they may have to settle for little more than what is on the table. True, the offer doesn't look too bad at first glance. But the banks will receive payment only after seven years and will get no interim coupon, a much bigger "haircut" than they had expected. An alternative offer, that creditors receive payment in full after seven years but receive no government guarantee and accept 40% in the form of assets in Dubai World's most troubled business unit, Nakheel, is no alternative at all, given the near impossibility of valuing Nakheel's island developments.

But creditors, among them HSBC Holdings, Royal Bank of Scotland Group and Standard Chartered, are short of options. A tribunal set up to handle claims against Dubai World is untried, and many creditors lack confidence in the existing legal framework to arbitrate or enforce a settlement, let alone, in the worst-case scenario, seize the company's assets.

Meanwhile, appeals to Dubai not to jeopardize its reputation with investors likely are to fall on deaf ears. Abu Dhabi, which already has pumped $20 billion indirectly into Dubai, is calling the shots now. And now that Dubai has the support of the world's fifth-largest holder of oil reserves and the Middle East's largest sovereign-wealth fund, it may be less concerned over its standing with international banks than maintaining the support of its neighbor.

Of course, the banks could take the nuclear option and reject a deal, forcing Dubai to either default, or once again go cap in hand to its oil-rich cousins in Abu Dhabi for more support, but this comes with a multitude of risks. Many creditors have a substantial presence in the United Arab Emirates. Dubai's rulers could make operating in the emirate tough for any bank that tries to play hardball.

The banks may be seething, but this is one indignity they may choose to suffer in silence.END

DFM and Nasdaq Dubai merger to raise liquidity

DFM and Nasdaq Dubai merger to raise liquidity

The news that the merger of the Dubai Financial Market (DFM) and Nasdaq Dubai is pressing ahead has come as a breath of fresh air for companies, market players and investors at a time when trading has been lacklustre for some weeks.

The $121.3 million (Dh445.1m) merger is likely to cut the cost of trading and create more flexibility and wider options for investors, institutions and foreign investors, said market analysts.

As the merger process gathered steam Emirates Business spoke to leading figures from brokerage firms about the likely impact of the merger and the consolidation of trading operations.

Debt clause weighs on Dewa

Debt clause weighs on Dewa

Dubai Electricity and Water Authority (Dewa) needs to ensure that the potential acceleration of payment for its $2 billion (Dh7.34bn) securitisation does not materialise to assuage investors and credit rating agencies.

Recently, the downgrades of the ratings of Dewa's securitisation programme, Thor Asset Purchase Company, have caused a "specified event" under the transaction documents to have occurred, which would lead to the acceleration of the rated debt.

That means it would have been possible that the payment of the debt instrument originally maturing in 2036, may have been redeemed in full in a much earlier date.

S&P tailors credit ratings for Gulf

Standard and Poor’s (S&P) yesterday launched a regional credit-ratings system through which companies in the Gulf will be judged against each other, instead of against their global peers.

The introduction of the GCC ratings system comes as S&P and other credit ratings agencies face a challenging business environment with disputes over changing assumptions of government support.

In recent months, S&P was dropped by Emirates NBD, the UAE’s largest bank, while the agency decided to stop rating a division of the government-owned Dubai Holding, saying it was not provided with enough financial information.

It’s good business to level with partners

Let us get the arguments against transparency in Dubai World affairs out of the way quickly.

Dubai World is not a quoted company, therefore has no obligation to be transparent at all; there is only one shareholder that matters, the Government of Dubai, and you can be sure that it is kept fully up to speed.

Moreover, the current negotiations concern private and confidential matters between bankers and their client. Who would be happy if their bank manager went around briefing the press on the details of their bank account?

Group sees Syria as a stepping stone

It is hardly surprising that it took some time and plenty of cajoling before Haysam Jazairi convinced his bosses that a move to Syria would be worth it.

No doubt his superiors at Halcrow, a leading British design and planning consultant, looked at the Arab nation and thought of a maverick state accused of backing Islamist extremists – more international pariah than business destination.

Yet Mr Jazairi, a Syrian based in the UK for 30 years, believed there was potential. He convinced Halcrow that things were slowly changing in Syria as reformers within the government have tentatively pushed to open up the struggling economy and shift it away from a socialist legacy which has seriously stymied growth and development.

Visitor increase supports Dubai hotels

The economy may be contracting, developers may not be being paid and rents and freehold prices may be in freefall but, roughly halfway through a critical season, tourism in Dubai is holding up reasonably well.

According to data from Dubai Tourism and Commerce Marketing, total new guest arrivals visiting the emirate in the first nine months of last year rose 3 per cent compared to the same period last year, to 5.6m. The number of visitors from the UK and Ireland has fallen but that is being offset by an increase in local tourism.

According to Deloitte & Touche, the consultants, who receive data from the operators of more than 24,000 rooms in Dubai, occupancy last year fell 10 per cent on the previous year – but was still 69 per cent.

Unicorn mulls Dubai Bank Islam stake

Bahrain's Unicorn Investment Bank reiterated on Monday it is mulling buying Dubai Group's stake in Malaysia's Bank Islam, but said a deal was not imminent as shareholders needed to agree on the right partner and price.

Dubai Group, an investment vehicle owned by the ruler of Dubai, said in October it was reviewing its options for the 40 percent stake in Malaysia's second largest Islamic bank as it shifts its focus closer to home.

"There is a degree of tension between the existing majority shareholder who would like the right partner, and the vendor who would like the right price," Frederick Stonehouse, head of strategic mergers and acquisitions at Unicorn told the Reuters Islamic Banking and Finance Summit in Bahrain.

Dubai World might try low repayment offer

The cost of insuring Dubai’s debt rose to its highest level in almost a year yesterday after news that Dubai World was considering offering its creditors 60 per cent of their money back, with repayments delayed until 2017.

The state-owned Gulf company’s international banking creditors said that it was unlikely that such an offer would materialise, adding that it was “miles away” from anything that would be acceptable to the lenders’ syndicate. “They could be trying to pre-market this, but we don’t think it will happen,” one well-placed person said.

The London-listed shares of Royal Bank of Scotland, HSBC and Standard Chartered, which are among Dubai World’s biggest creditors, all rose yesterday, indicating that the stock market was not pricing in big Dubairelated debt write-offs.