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Saturday, 17 April 2010

Dubai Electricity Bonds Get Lowest Investment Grade at Fitch

Dubai Electricity and Water Authority’s five-year $1 billion bond issue received the lowest investment grade at Fitch Ratings, reflecting the deterioration in the creditworthiness of the emirate.

Fitch rated the new debt BBB- and placed it on Rating Watch Negative. DEWA is Dubai’s first government-owned entity to tap debt investors since the state-owned holding company Dubai World roiled global markets in November by proposing to freeze its loan repayments.

“DEWA’s ratings remain aligned with the creditworthiness of Dubai,” Fitch said. “DEWA’s ratings are also supported by its monopolistic market position, improving efficiency levels and modern asset base.”

DEWA’s new 8.5 percent bonds, sold yesterday, are part of a $3 billion medium-term note program to fund expansion.

Moody’s Investors Service rates DEWA’s debt Ba2, two levels below investment-grade status.END

Qatari Diar Acquires 5% Stake in Veolia, Gets Seat on Board

Qatari Diar, a unit of the country’s sovereign wealth fund, acquired a 5 percent stake in Veolia Environnement SA to work on joint projects.

The purchase “reflects the two groups’ mutual ambition to work together on infrastructure and utilities projects in the Middle East and North Africa,” Veolia, the world’s biggest water company, said in an e-mailed statement today.

Qatari Diar will be appointed to the board of directors of Veolia and has indicated “it will hold its stake and its voting rights for three years,” Veolia said.

Natural-Gas Cuts Likely Off the Cartel Table

Libya's top oil official said a meeting of natural-gas exporters Monday will reject an Algerian proposal for OPEC-style output cuts meant to ease the global oversupply of gas and stabilize weak spot prices for the fuel.

Shukri Ghanem, head of Libyan National Oil Co., said he didn't expect the Gas Exporting Countries' Forum, which meets in the Algerian resort of Oran on Monday, "to turn into a gas equivalent of OPEC, capable of cutting or increasing production." The forum is an 11-nation group that includes the world's biggest gas producers like Russia and Qatar.

In an interview, Mr. Ghanem, who is attending Monday's meeting, said there were "intrinsic differences" between oil and gas that would prevent the emergence of a cartel along the lines of the Organization of Petroleum Exporting Countries capable of taking coordinated action to shore up prices.

Dubai World and creditors in rate ‘stand-off’

Dubai World has met its leading creditors for the first time since it tabled a $23.5bn debt restructuring plan last month, according to people with knowledge of the talks.

The talks, in Dubai this week, were to negotiate further the terms of the plan. While the company is proposing to reschedule its debts over five to eight years, while cutting the interest paid to 1 per cent per annum, its lenders want a change to the terms, the sources said.

Some of the banks would like an increase in the interest rate and a reduction of the time over which they are repaid under the proposals.