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Monday, 23 August 2010 - BP looks at Libya to help revive its fortunes

BP has a lot riding on its controversial exploration programme off the coast of Libya.

The UK oil group, whose reputation is under fire over its Gulf of Mexico oil spill, is preparing to drill a first deep-water well in the Gulf of Sirte in the autumn in what will be one of its biggest-ever exploration commitments, in an offshore area that is the size of Belgium.

The company is not alone in targeting the North African country. Most of the world’s oil majors have quietly been tapping into its promise in recent years.

Islamic bonds bounce back | beyondbrics |

After spooking investors with a calamitous array of defaults and near misses, the Islamic bond market these days is looking less accident prone. So much so that one Kuwaiti research house forecast on Monday that global issuance this year could climb to $30bn.

The research house KFH also highlighted how Islamic bonds are “globalising”, as the stable of issuers broadens beyond the Gulf and Malaysia to unexpected outposts including Japan, and possibly the UK.

The research house says the market is experiencing a “remarkable recovery” from the effects of the global financial crisis, notching up $16.5bn of new issuance in the first half - more than double the amount in the same period last year.

Lebanon May Roll Over $4.8 Billion of Eurobonds, Finance Minister Says - Bloomberg

Lebanon may rollover this year as much as $4.8 billion in debt maturing by the end of 2011 and could sell Eurobonds to take advantage of low global interest rates, said Finance Minister Raya Haffar el-Hassan.

“We are receiving visits from investment banks who are giving us all the options,” Hassan said in an interview at her office in Beirut today. “My team is studying all the offers that we are receiving which include swapping.”

Lebanon has about $893 million in terms of the principal amount of maturing Eurobonds due before the year end and $2.14 billion of principal debt due in 2011. When including interest payments the total redemption would be $1.5 billion for the remaining part of this year and $3.3 billion in 2011.

Bahrain Financial Harbour Obtains $240 Million Islamic Loan to Repay Debt - Bloomberg

Bahrain Financial Harbour, which houses banks and financial institutions, received a 90.5 million-dinar ($240 million) Islamic facility to repay debt.

Al Salam Bank, BBK, Kuwait Finance House, National Bank of Bahrain, and Bahrain Islamic Bank helped arrange the seven-year Ijara facility, according to a joint statement issued by Bahrain Financial and the banks today.

Bahrain Financial used the financing to repay a $134 million sukuk, according to the statement. The balance will be used to settle other obligations and for expansion, it said.

Kuwait, Qatar funds up AgBank IPO investment, Kuwait IPOs, Markets - Maktoob Business

Kuwait Investment Authority (KIA), the country's sovereign wealth fund agreed to more than double its investment in Agricultural Bank of China's initial public offering to $1.9 billion, a local newspaper said.

Qatar Investment Authority (QIA) also raised its stake to $6 billion from $2.8 billion, the paper said on Monday without citing sources, signaling Middle East funds took a big slice of the record IPO.

'The Kuwait Investment Authority has decided to increase its stake in the Agricultural Bank of China from $800 million to $1.9 billion...(and) Qatar Investment Authority (QIA) increased its stake from $2.8 billion to $6 billion.' Kuwaiti daily al-Jarida said."

Saudi Food Producer Savola Buys Muhaidib's Stake in Units With Share Swap - Bloomberg

Savola Azizia United Co., a Saudi food producer, agreed to buy Al-Muhaidib Holding’s 10 percent stake in Savola Foods Co. and its 18.6 percent stake in Al Azizia Panda United Co. to expand its food and retail business.

Savola, based in Jeddah, plans to issue 37.6 million preferential shares valued at 376.3 million riyals ($100 million) to pay for the stakes, the company said in a statement on the Saudi bourse website today. Savola said the amount represents 7 percent of its capital.

Savola, which has 113 outlets in Saudi Arabia, expanded its businesses to meet rising demand from a growing population in the Arab world’s biggest economy. In October, the company acquired the Saudi assets of Casino Guichard-Perrachon SA’s Geant superstores from Fawaz Abdulaziz Alhokair & Co.

Dubai Stocks Advance on Report Official Says Deficit May Fall; Emaar Gains - Bloomberg

Dubai shares climbed to the highest in two weeks after Reuters reported the emirate’s economy is performing better than expected bolstering appetite for local assets.

Emaar Properties PJSC, builder of the world’s tallest skyscraper in Dubai, gained to the highest in more than two weeks. Drake & Scull International PJSC, an engineering contractor for the real-estate industry, advanced for a fourth day. The DFM General Index gained 0.5 percent to 1,498.92 at 1:15 p.m. in Dubai. The Bloomberg GCC 200 Index of Gulf stocks rose 0.1 percent.

Dubai’s budget deficit this year may be lower than the 2 percent of gross domestic product forecast for 2010, Reuters reported yesterday, citing Dahi Khalfan Tamim, head of the government’s budget committee. Also, the director general of the emirate’s Department of Finance, Abdulrahman al-Saleh, said Dubai is keeping its options open for a sovereign bond sale, and is under no pressure to sell debt this year, Reuters reported.

GCC Market Analytics: DFM Stocks: Year-to-Date & Weekly Returns

A quick data visualisation of the returns for DFM stock returns last week compared with their year-to-date returns.

Although it fell 1.7% last Aramex has been best performer so far this year with a 8.9% return. Deyaar fell 3.2% last week and is down a miserable 48% for the year.


Why taxes are low in the Middle East |

The Islamic Republic of Iran conjures up many images, but "tax haven" may not be one that immediately springs to mind.

The other day I was chatting with an Iranian friend who has just moved to Britain and had his first encounter with the British tax system. He was wondering: "Do I really have to pay?"

Back in Tehran, they have a kind of council tax, though my friend's family, in common with many others, hasn't paid it for years and the authorities haven't seriously tried to collect it, either.

Bahrain Currency Ratings Cut to A3 From A2 by Moody's; Outlook Is Stable - Bloomberg

Bahrain’s sovereign credit rating was lowered by Moody’s Investors Service, which cited higher oil prices needed by the government to balance its budget and the negative outlook on the banking sector.

The nation’s local and foreign-currency debt ratings were downgraded one level to A3, the seventh-highest investment grade ranking, from A2, with a stable outlook, Moody’s said in an e- mailed statement in Dubai today.

“A gradual but significant rise in the breakeven oil price in the Bahraini budget over recent years” and a “relatively modest level of official financial assets has led to a divergence between the government’s fiscal flexibility and that of rating peers,” Moody’s said in the statement.

“Foreign Banks Eye Kuwait’s $104bn Plan” � Alpha Dinar- talking GCC finance

I recently read an article titled, “Foreign banks eye Kuwait’s $104bn plan” which stipulates that the Kuwaiti government’s KD30 billion development plan interests not only local investors, but also foreign banks.
The plan, which was proposed in April of this year, aims to start a stream of investments in major infrastructure projects such as building new ports and cities and investing to raise oil and natural gas production. The government will finance 50% of the projects and the rest will be financed by the private sector. The government gave the approval for the plan to be financed by the Kuwaiti banks, however foreign banks operating in Kuwait came in and are keen to have a share in the financing.
Financing the world’s fourth largest oil exporter in an unhealthy financial environment is a good deal, as it will decrease NPLs and provisions. I’m not sure how much share each bank will be given, but I would guess that it would be according to competitiveness. If that is the case, foreign banks will have much more room to give lower rates than local banks as benchmark rates in the US and Europe are much lower than Kuwait.

Dubai govt says 'options open' for 2010 bond issue | Reuters

Dubai's government will keep its options open for a potential sovereign debt issue later this year but it is not under pressure to do so, its finance chief said late on Sunday.

'The options are open. We are not under pressure to do anything,' Abdulrahman al-Saleh, director general of Dubai's Department of Finance, told Reuters on the sidelines of gathering of Dubai officials."

Persian Gulf Falls Behind Asia in Sukuk Sales Amid Slump: Islamic Finance - Bloomberg

Islamic bond offerings from the Persian Gulf are struggling to keep up with Malaysia, the global hub for Shariah-compliant financial services, after new sales in the region fell to their lowest level in five years.

Issuance of Islamic debt from the Gulf has declined 24 percent to $2.5 billion so far this year, involving sales by three companies, according to data compiled by Bloomberg. Asia’s 29 borrowers, including Malaysia, issued $5.7 billion. The Gulf last outstripped Asian sukuk offerings in 2007.

The slump in sales shows investors have yet to fully regain confidence even as Dubai Worldworks toward restructuring $23.5 billion of debt and global economies recover from the deepest financial crisis since the 1930s. HSBC Holdings Plc, Europe’s largest bank, and Mashreq Al Islami bank in Dubai said planned government sales in the Persian Gulf will help revive the market.