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Monday, 3 May 2010

Indian banks, financial service firms using Dubai as base for regional expansion

Indian banks, financial service firms using Dubai as base for regional expansion


Indian banks and financial services companies are once again making their presence felt at the Dubai International Financial Centre (DIFC).

According to a Gulf News report, momentum has picked up over the last two years.

The report claims that there are a dozen Indian institutions ranging from banks, asset management companies and financial advisory services that are operating from the DIFC.

Junk Bond Sales Set Record as Investors Waiver: Credit Markets - Bloomberg.com

Junk Bond Sales Set Record as Investors Waiver: Credit Markets - Bloomberg.com


Companies sold $33.7 billion of junk bonds in April, a record for the month, with borrowers rushing to issue before investors pull back from the riskiest securities.

Moody’s Investors Service says issuance may rise 10 percent this year, while investment-grade sales drop 7 percent. OnCure Holdings Inc., a manager of radiation oncology treatment centers, and American Petroleum Tankers LLC, an affiliate of Blackstone Group LP, are among companies planning to sell high-yield bonds.

While issuance soars and cash streams into the market, yields on speculative-grade debt rose last week relative to government bonds for the first time since the period ended Feb. 26, according to Bank of America Merrill Lynch index data. The rise underscores concern that Europe’s growing fiscal crisis and an investigation into Goldman Sachs Group Inc. may slow the economy.

Etihad Is Unlikely to Break Even This Year, CEO Says (Update1) - Bloomberg.com

Etihad Is Unlikely to Break Even This Year, CEO Says (Update1) - Bloomberg.com


Etihad Airways, Abu Dhabi’s flag- carrier, won’t break even this year after its yields were hit by the global economic crisis and swine flu, Chief Executive Officer James Hogan said.

“If we’d had a better year in 2008 and 2009, we would have broken even this year,” he said in Abu Dhabi today. “The global financial crisis and the pandemic hit us in yield, pushed us back down to 2007 levels.” Etihad should break even next year, he added.

Airline losses worldwide amounted to $9.4 billion in 2009, almost double a previous forecast, as a swine flu outbreak compounded the effects of the recession, according to the International Air Transport Association.

Shuaa Posts First-Quarter Net on Brokerage, Fund Fees (Update1) - Bloomberg.com

Shuaa Posts First-Quarter Net on Brokerage, Fund Fees (Update1) - Bloomberg.com


Shuaa Capital PSC, the biggest investment bank in the United Arab Emirates, turned to a profit in the first quarter helped by income from the brokerage and asset management units.

Net income rose to 19.5 million dirhams ($5.3 million) compared with a loss of 202.2 million dirhams a year earlier, the bank said today in a statement to the Dubai bourse. Shuaa’s fee-generating businesses posted a profit of 27.9 million dirhams in the quarter.

The investment bank posted losses in the third and fourth quarters of last year, according to data compiled by Bloomberg.

U.A.E. Shares Advance on Earnings, Dubai World Debt Optimism - Bloomberg.com

U.A.E. Shares Advance on Earnings, Dubai World Debt Optimism - Bloomberg.com


The United Arab Emirates shares advanced for the first time this week after Union Properties PJSC said quarterly profit increased and HSBC Bank Middle East Ltd. said Dubai World’s proposal to restructure its borrowings is “very fair.”

Union Properties, Dubai’s third-biggest developer by market value, surged the most in almost two months as it said first- quarter profit rose 67 percent. Abu Dhabi Commercial Bank PJSC, the U.A.E.’s third-largest bank by assets, rose the most in three months. The DFM General Index climbed for the first time this week, advancing 0.7 percent, the first biggest gain since April 29, to 1,736.61 at the close in Dubai. Abu Dhabi’s ADX General Index climbed 0.8 percent, the most in three weeks, to 2,795.38.

“Local buyers are being dragged into all the large cap names by the performance of UPP and ADCB, as well as some additional positive commentary regarding Dubai World’s debt restructuring,” said Julian Bruce, director of equity sales at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank.

Abu Dhabi ADCB Gains, Pares April Drop, on Shuaa Loan Decision - Bloomberg.com

Abu Dhabi ADCB Gains, Pares April Drop, on Shuaa Loan Decision - Bloomberg.com


Abu Dhabi Commercial Bank PJSC surged the most in more than three months, paring last month’s 18 percent drop, as Shuaa Capital PSC’s said it will settle a loan the investment bank guaranteed for Gulfinvest International KSC.

ADCB advanced 8 percent, the biggest gain since Jan. 28, to 1.89 dirhams, giving the United Arab Emirates’ third-largest bank by assets a market value of 9.1 billion dirhams ($2.5 billion).

Shuaa’s board ratified a 240 million-dirham loan from ADCB and will use it to settle obligations against its guarantee of a 200 million-dirham loan owed by Gulfinvest to ADCB. Kuwait-based Gulfinvest said April 4 it defaulted on the debt.

Dubai World Debt Proposal Is ‘Very Fair,” HSBC Says (Update1) - Bloomberg.com

Dubai World Debt Proposal Is ‘Very Fair,” HSBC Says (Update1) - Bloomberg.com


Dubai World’s proposal to restructure $24.8 billion of its borrowings is “very fair” and an accord may be signed in a few weeks, said the chief executive officer of HSBC Bank Middle East Ltd.

“We think the proposal is fair and a good way forward for the United Arab Emirates,” Simon Cooper said in Abu Dhabi today. “I see no reason why it should not be signed in a few weeks. We would sign today.”

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

Investors show little appetite for new ETF

A little more than a month after the launch of the first exchange-traded fund (ETF) in the UAE, investors are showing little enthusiasm.

After peaking on April 15 when 150,000 shares traded, volumes have slipped for the OneShare Dow Jones UAE 25 ETF. There were 25,000 shares traded yesterday.

An ETF tracks a basket of stocks or commodities but trades like an individual share. In this case, the OneShare ETF includes the top 25 publicly traded companies in the region.

Wall St. WTF: It may be a storm in a teacup, but it can still kill you if you live in the teacup

So the Dubai World Drama continues. The powers that be at Dubai World are grudgingly considering raising to 2% from 1% the interest rate they’ll pay on the extended loans. Analysts say this would result in a 20-25% loss to the creditors. This is because while they would nominally get their principal back the amount of money they would earn in interest would be far less than they are expecting or could get elsewhere if they were paid back in full on time. Nakheel suppliers on the other hand are getting cash this month plus an Islamic security that will yield 10%. Reuters is reporting that the Bankers are not happy. Perhaps not unhappy enough to try their luck with a declaration of default but unhappy enough to push for more. The drama is not over.

Support for the deal is coming from an unsurprising source: Dubai itself. In a letter to the editor Nasser Al Saidi, the Chief Economist of the DIFC, has published a rousing defence of the Dubai World restructuring and has attempted to draw some lessons from it. While it is not surprising that Dubai is praising itself for its handling of the crisis two things are disturbing about the letter. The first is that the crisis is far from over: the Dubai World creditors have not accepted the plan, the losses elsewhere in Dubai continue to be staggering and Dubai has no room left to manoeuvre without another appeal to Abu Dhabi because they have completely drained the DFSF. The Second is the very disturbing sense I get from reading the letter that the powers that be in Dubai have neither a sure grasp of reality nor an awareness that, here in the future, their bold assertions of the impossible inspire laughter rather than awe.

Dr. Al Saidi says that the restructuring proposal “removes the cloud of uncertainty” which has hovered over regional markets of late and points to the recent declines of the Dubai CDS spreads from their crisis highs. Unmentioned goes the fact that Dubai CDS are still 150 bps higher than they were before the crisis began, are higher than either Portugal or even Lebanon both of which are in serious fiscal trouble. At 414 are right about where Greece was before its’ spike to 1000 and then forcible bailout by the IMF. It would seem that some uncertainty remains.

Dubai investment business hit by $562m loss

The investment arm of Dubai International Financial Centre, the emirate’s tax-free financial district, reported a net loss of $562m for 2009 as it wrote down real estate and business investments in the emirate.

DIFC Investments, which owns buildings in the district as well as direct stakes in global companies, said it had received a government loan of $500m in 2009 and another of $500m in 2008, as it restated 2008 profits at $839m.

The government-owned business, which posted results on NasdaqDubai where it has listed a $1.25bn Islamic bond maturing in 2012, rose to prominence in the Dubai’s real estate-driven boom as global financial institutions flocked to the centre as a hub for their regional banking operations.

Gulf insurance sector set for further growth

The insurance industry in the Arab countries of the Gulf Co-operation Council is expected to see continued growth and interest from overseas insurance groups, in spite of the regional economic slowdown following the global financial crisis.

The faster economic growth of the GCC countries combined with low levels of insurance cover among the local population is expected to help maintain a high growth rate, which saw premium volumes for the region increase by 27 per cent between 2007 and 2008, according to a report out on Monday from AM Best.

The region has seen good growth in commercial insurance related to building and infrastructure projects in recent years. This has been hit by the financial crisis and regional economic slowdown, but increasing personal insurance is expected to help take up the strain.

Nakheel May Pay Bonds Next Week With No Formal Dubai World Deal

Nakheel PJSC may pay about 3.6 billion dirhams ($980 million) of Islamic bonds due next week even if its parent Dubai World doesn’t reach a final accord with creditors to restructure debt, a government spokeswoman said.

Dubai World in March said Nakheel’s local-currency and dollar-denominated sukuk will be paid on time “assuming sufficient support” for the restructuring plan from banks. A formal agreement with creditors isn’t needed to repay the bonds, said the spokeswoman for Dubai’s Department of Finance.

Dubai World, one of the emirate’s three main state-owned holding companies, and Nakheel are seeking to renegotiate about $24.8 billion of debt after the global credit crisis battered Dubai’s real-estate market and left the emirate’s companies unable to get loans.

Dubai Aerospace Had Full-Year Loss of $21.1 Million, DIFC Says

Dubai Aerospace Enterprise Ltd., a state-controlled aviation leasing and services company, narrowed its full-year loss to $21.1 million, stakeholder DIFC Investments LLC said in its annual report.

That’s down from a year-earlier loss of $111.8 million, DIFC said in the report, posted today on the Nasdaq Dubai website. The state-owned company owns a 23.3 percent stake in Dubai Aerospace. Revenue declined to $1.58 billion from $1.6 billion in 2008.

The leasing company was set up in 2006 to build businesses in airport management, maintenance, leasing, services and education. In November 2008, its DAE Capital leasing unit placed orders for 200 planes worth $27.2 billion at the Dubai Air Show, including 70 of Chicago-based Boeing Co.’s 737 models and 70 A320s built by Toulouse, France-based Airbus SAS.END