Wednesday, 14 July 2010
Qatari Diar Finance, the property arm of the Gulf Arab state's sovereign wealth fund, sold a two-part $3.5 billion bond deal Wednesday, according to a person familiar with the transaction.
The $2.5 billion 10-year tranche offers a yield premium of 1.90 percentage points over comparable U.S. Treasurys to yield 5.004%. The $1 billion five-year tranche carries a yield of 3.665%, a premium of 1.80 percentage points over Treasurys.
Both sold below initial price guidance, affirmation that demand for the notes was so high that the issuer does not have to pay as much to attract investors.
Order books swelled early to more than $20 billion for the total deal, according to Andrew Brenner, head of emerging markets at Guggenheim Securities.
Investors said that demand is helped by the government's explicit full backing of the notes.
Qatar has an "extremely high quality" credit rating, said Gorky Urquieta, head of emerging-market debt at ING Investment Management.
As a result, Moody's Investors Service assigned the notes and issuer an Aa2 rating.
"QDF's Aa2 ratings are in line with the sovereign rating of Qatar because the government, acting through the Ministry of Economy and Finance, will unconditionally and irrevocably guarantee the payments in respect of the bonds that QDF plans to issue," said Martin Kohlhase, a Moody's assistant vice president based in Dubai.
Credit rating agency Standard and Poor's last Wednesday assigned a double-A rating to the proposed bond issue. It said most of the proceeds from the deal will finance the development of large-scale real-estate projects in Qatar.
The money will finance future capital expenditures and repayment of certain debts incurred by Barwa, Qatar's second-largest real-estate developer by market value, which is 45% owned by Qatri Diar, said S&P.
Barclays, HSBC, Qatar National Bank, Standard Chartered and Royal Bank of Scotland were in charge of the sale.
The rapid expansion and diversification of the financial sector must, despite the resulting occasional excesses, count as one of the great recent successes of the Gulf nations.
The past decade has seen the emergence of leading stock exchanges, non-bank financial institutions, and a steadily growing range of products. Much of this process has been sustainable and an important driver of economic growth.
Yet the financial sector remains a work in progress. The gains have been uneven and the current crisis, in addition to underscoring the value of conservative regulation, has emphasised the importance of addressing remaining anomalies. The most important fall under five headings:
The site at Taweelah – a barren, sandy tract of land on the outskirts of Abu Dhabi – might not impress now, but the emirate hopes it will eventually be the industrial heart of a more balanced, diverse economy.
Strategically situated roughly halfway between Abu Dhabi and neighbouring Dubai, it will be the site of the Khalifa Port and Industrial Zone, arguably one of the most important projects planned in the United Arab Emirates.
There is no official cost estimate for the overall KPIZ project, which is not due to be completed until 2030, but Zawya Dow Jones, a data provider, estimates that just the zone’s port and infrastructure will cost $24bn, not counting the various individual plants and other associated projects.
SBI, Oman's SGRF set up $100 mn India equity fund-Finance-Banking/Finance-News By Industry-News-The Economic Times
The country's largest lender SBI and the sovereign wealth fund of Oman today set up a fund with an initial corpus of $ 100 million (about Rs 450 crore) to pick up equity in Indian projects.
The agreement to establish the fund was inked by SBI Chairman O P Bhatt and State General Reserve Fund (SGRF) CEO Warith Al-Kharusi and it will be expanded to $1.5 billion (about Rs 6,750 crore) in due course.
Oman Minister of National Economy Ahmed Macki said the fund will start immediately.
In what is being portrayed as a landmark consolidation, stocks listed on Nasdaq Dubai are now being traded on the same system as the local Dubai Financial Market.
As of this week, clearing, settlement and custody are based on the DFM system although the two exchanges retain separate identities.
The exchange authorities are describing the new arrangements as an outsourcing rather than a merger. But professionals say that, either way, the pairing is not so far attracting the retail money that had been hoped for.
Nakheel, the company behind some of Dubai’s most famous landmarks, presented detailed restructuring plans to creditors on Wednesday. It is seeking to extend maturities on $10.5bn in debts amid a government-backed recapitalisation for the troubled developer and Dubai World, its parent.
Around 20 banks attended a meeting at the Atlantis hotel on the Palm Jumeirah, Nakheel’s flagship project.
Nakheel has agreed terms with its major lenders on a coordinating committee – Barclays, National Bank of Abu Dhabi and Dubai Islamic Bank – and will now seek to persuade the other creditors over the coming months.
It may be a small deal, but the acquisition by Orascom Construction Industries, Egypt’s largest listed company, of a Dutch firm which owns and operates ammonia tanks in the port of Rotterdam is part of a global expansion strategy aimed at placing OCI among the world’s top fertilizer producers.
MICRO Chemie B.V., the company which has just been purchased by OCI, has a 25-year renewable lease on an ammonia terminal in Rotterdam with river and rail access allowing delivery to France, Germany, Belgium and the Netherlands.
In March, OCI bought an ammonia plant in the Netherlands and it says it is already the second largest nitrates producer on the continent. The company’s plants in Egypt and the Netherlands have a combined capacity of 5m tonnes of nitrogen-based fertilizer, but this figure is set to rise to 8m in 2012 when its new plant in Algeria comes fully on stream.
Qatar shares advanced to the highest level this month, leading Gulf markets higher, on increased confidence in the global recovery after Singapore raised its economic growth forecast. Saudi shares retreated as oil fell.
The QE Index climbed 0.9 percent to 7,018.48, the highest since June 28. Qatar Islamic Bank, the Gulf state’s biggest Shariah-compliant lender, led the gain. Qatar Insurance Co. advanced 4.1 percent, the most in two months. The Bloomberg GCC 200 slipped 0.1 percent and Saudi Arabia’s Tadawul All Share Index lost 0.7 percent.
“Gains in global markets, especially Asia, helped push up local shares,” said Humam al-Shamaa, economic adviser at Al- Fajer Securities LLC, a U.A.E. brokerage.
Nakheel PJSC, the Dubai World-owned property developer, presented a detailed proposal to its creditor banks on altering the terms on $10.5 billion of loans and unpaid bills, a company spokesman said.
Presentations were made by Nakheel and its advisers at today’s meeting, as well as by accounting firm KPMG and law firm Allen & Overy, advisers to a committee representing Nakheel’s lenders, the spokesman said. Banks were asked to respond to the proposals by August 31, said the spokesman, who declined to give further details.
Nakheel plans to offer lenders interest of 4 percentage points more than benchmark rates on new loans as part of the restructuring, two bankers with knowledge of the plan said yesterday. In return, lenders would agree to extend the life of the loans by five years, said the people.
Mubadala, one of Abu Dhabi’s most prominent state investment vehicles, is launching a joint venture with Pramerica Real Estate Investors to raise capital for property projects in the emirate and set up funds to invest in global markets.
The company, Mubadala Pramerica Real Estate Investors, will be headquartered in Abu Dhabi and initially focus on raising funds to invest in middle-income housing in the emirate.
But it also plans to launch funds that will provide international investors access to the broader Middle East property market, as well as vehicles to invest in overseas real estate.
Abu Dhabi Islamic Bank ADIB.AD plans to raise as much as $5 billion through the sale of Islamic bonds, or sukuk, under a trust certificate issuance program detailed in a July 8 prospectus.
The second-largest lender in the United Arab Emirates posted the prospectus on the London Stock Exchange on Tuesday, listing HSBC (HSBA.L) as the lead arranger on the Islamic bond program.
State-controlled ADIB did not provide a reason for the sukuk issuance program, but the bank, like many other UAE financial institutions, has been forced to take provisions against bad loans amid the global financial crisis and turmoil over Dubai World's [DBWLD.UL] restructuring.
IN JUNE The Economist wrote a long piece about the growing success of aviation in the Gulf. And later in the month, Emirates confirmed that its appetite for expansion was indeed far from sated, with a remarkable new order for 32 of Airbus's massive A380s, on top of the 48 it already has on order and the ten it has in operation. In reaction to all that, this piece in Air Transport World looks at how European airlines are countering the Dubai-based carrier’s aggressive strategy. In particular I would draw your attention to a quote from the Centre for Asia Pacific Aviation, a market analyst, about Emirates’ new A380 order. It is, apparently,
enough to make irreversible the airline industry's transformation from a heavily regulated, nationalistic anachronism to something approaching a real business. No longer can traditional competitors hope to stave off this threat to the status quo, as they have been hoping in recent years while the airline expanded threateningly. This order marks a genuine turning point in that process of change. It is so large in fact that competitors' business plans will be reshaped by it.
That could turn out to be correct, although we don't hear sounds of panic from America quite yet. But Emirates has clearly upped the ante for the industry's big players: airlines of the world, prepare your responses.
At least three private equity firms have bid for a minority stake in Network International, the Dubai payment company owned by Emirates NBD ENBD.DU, with a decision seen by mid-August at the earliest, sources said.
A deal could take longer to conclude, however, as Emirates NBD is still undecided on how much and when to sell a stake in the business, two banking sources told Reuters on Tuesday.
Emirates NBD has for more than a year considered how to support the international expansion plan of Network International, which one of the two sources expects will achieve a valuation of over $1 billion.
The yield premium on Indonesia’s sovereign sukuk over non-Islamic bonds is down 58 percent since the bonds were sold in April 2009, while Malaysia’s debt rallied to a record as investors gain confidence in the securities.
The difference in yield between Indonesia’s 8.8 percent Islamic debt due April 2014 and notes maturing the same year that don’t adhere to the religion’s ban on interest narrowed to 37 basis points, or 0.37 percentage point, from 87 at the time of issue, according to prices from the Royal Bank of Scotland Group. The yield on Malaysia’s 3.928 percent sukuk due June 2015 dropped 45 to 3.39 percent since it started trading May 28, prices from HSBC Holdings Plc show.
Sukuk from Asian nations are rallying before $5.8 billion in planned sales in the region this year, including a 1 billion ringgit ($312 million) offering from Kuala Lumpur-based Cagamas Bhd., Malaysia’s biggest mortgage buyer. Indonesia chose three banks yesterday to manage the sale of as much as $650 million in Islamic bonds in October after securing credit ratings upgrades from Standard & Poor’s Corp. and Moody’s Investors Service in the past year as the economy recovered.
The rapid rebound in oil consumption is likely to slow next year as western countries adopted more fuel-efficient vehicles and the recovery faded, the International Energy Agency said on Tuesday.
The Paris-based energy watchdog for 28 industrialised countries predicted that oil demand would grow by 1.35m barrels a day next year to 87.84m barrels a day.
The change would be less than the 1.77m b/d gain in oil demand predicted for 2010 compared with 2009.
Courtesy of the AAR:
What are the latest numbers for U.S. railroads?
- U.S. freight railroads originated 1,415,630 carloads in June 2010, an average of 283,126 carloadsper week — up 10.6% from June 2009 (see chart below right) but down 10.2% from June 2008 on a non-seasonally adjusted basis. In the second quarter of 2010, carloads were up 13.8% over the second quarter of 2009. For the first six months of 2010, carloads were up 7.8% over the first six months of 2009.
- June 2010’s weekly average of 283,126 carloads was down from May 2010’s 288,419 averageand down from April 2010’s 294,758 average (see chart below left). In other words, after four straight months of increasing average carloads (January to April 2010), average weekly carloads have fallen for two straight months (May and June 2010) on a non-seasonally adjusted basis.
- On a seasonally adjusted basis, U.S. rail carloads fell 1.3% in June 2010 from May 2010, following a 1.1% decline in May 2010 from April 2010. After bottoming out in May 2009, seasonally adjusted rail carloads trended upward, with some fits and starts along the way, through April 2010. They’ve now declined for two consecutive months.
- The declines in rail carloads over the past couple months have not been huge, and they certainly don’t prove that the wheels are coming off the economy’s bus. After all, the improvement in carloads this year over last year is still significant: U.S. railroads originated 136,136 more carloads in June 2010, and 454,708 more carloads in the second quarter of 2010, than they did in the comparable periods in 2009.