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Tuesday, 21 September 2010

FT.com / Special Reports - Saudi Arabia’s desert dream remains a work in progress

Turreted rose-coloured walls and towers mark the entrance to King Abdullah Economic City (KAEC), 70km north of Jeddah on the Red Sea coast of Saudi Arabia. The traditional desert motif blends with what developers are calling the future of cities in the oil-rich kingdom.

Through the gate, banners flap in the wind, depicting the ultra-modern, eco-friendly model city of the future. The $27bn project will be as large as Washington DC and comprise an industrial zone, financial centre, luxury villas, retail outlets, schools, resorts and a seaport.

If all goes according to plan, KAEC and six other economic cities should create 1m jobs for Saudi nationals while easing demographic pressure on the main cities of the kingdom, and ultimately contributing as much as $150bn to the gross domestic product, argues the cities’ promoter, Sagia, Saudi Arabia’s investment authority"

Aluminium Bahrain plans IPO at year-end-sources | Reuters

Aluminium Bahrain (Alba), owned by the country's sovereign wealth fund Mumtalakat, plans to launch an initial public offering (IPO) later this year, two sources familiar with the matter said.

'It's planned for November or December,' one source said, but declined to say how much Alba was looking to offer.

One of the sources said JP Morgan (JPM.N) had been appointed as advisors."

FT.com - Islamic scholars cross cultural divide

When 70 graduating students at Al-Azhar university in Cairo, dressed in the traditional robes of Muslim religious scholars, mounted a stage to receive their English-language certificates, they were marking a first.

Al-Azhar is the oldest and most prestigious institution of Islamic learning in the Sunni Muslim world, but these students were the first to be proficient in English.

An English language centre at the Egyptian university, established with British support, offers tuition to students in all five departments of the Faculty of Islamic Studies. This forms the centrepiece of a partnership between Britain and Al-Azhar, aimed at bolstering the university’s international reach and reinforcing its moderate interpretation of Islam.

GCC debt is 'interesting' due to high yields, says BlackRock - Business Intelligence Middle East - bi-me.com - News, analysis, reports

Gulf Cooperation Council countries’ debt is “interesting” for investors because of high yields, according to BlackRock Inc., the world’s biggest money manager.

“There is a global search for yield and the GCC is an interesting place to look,” Nick Anderson, managing director for Middle East and Africa at BlackRock, told a conference in Dubai today. “You are seeing people increasingly focused on the region because there are some high yields.”

The average yield on bonds sold by GCC issuers, including Qatar and Saudi Arabia, fell 91 basis points, to 4.79% so far this quarter, according to the HSBC/NASDAQ Dubai GCC Conventional US Bond Index. Bond markets are starting to pick up in the GCC after new issuances were halted during the financial crisis as the cost of borrowing soared.

Banks: changing of the Dubai-based guards | beyondbrics | FT.com

The Gulf is known for its stable autocracies with entrenched rulers, but its international banking fraternity is starting to look decidedly different of late.

Deutsche Bank today announced that Henry Azzam, a long-standing luminary of the Middle East banking community, has stepped down as chief executive to become the German bank’s non-executive chairman for the region. He is the latest of a long list of Dubai-based banking chieftains that have left executive positions recently.

Over the past year or so the regional heads of Citigroup, Nomura, Morgan Stanley, Royal Bank of Scotland, Standard Chartered, UBS, Merrill Lynch and HSBC have all left their local posts.

There is always churn in financial services - particularly after an earth-shattering crisis - and it is difficult to discern any clear trends from the changing of the Dubai-based guard. Some were pushed out, others were promoted or moved on to other foreign postings."

Dubai's MAC Sharaf Brokerage to Close as Volumes, Stocks Tumble in U.A.E. - Bloomberg

MAC Sharaf Securities LLC, a Dubai- based brokerage, has sought approval from the market regulator to halt operations for a year, joining more than 12 companies making similar requests after volumes and stocks slumped.

“We have decided to voluntarily suspend operations of the brokerage business as we review the market over the next year,” Gerhard Hametner, MAC Sharaf’s marketing manager, said in a phone interview today. “Volumes have not been sufficient enough to sustain brokerage firms in the market for some time.” MAC Sharaf has 25 employees, Hametner said.

The volume of shares traded in Dubai plummeted to a daily average of 160 million this year from 457 million in the year- earlier period. Dubai’s benchmark index of 32 stocks slumped 80 percent to 1,701.15 at the close today after reaching a record in November 2005.

Buy us out, UK city says to Arab funds

Birmingham council leaders are in talks with Middle East sovereign funds, hoping to plug a budget hole selling some of the billions of pounds of trophy assets owned by Britain's second city.

The NEC -- Britain's biggest exhibition centre, prime real estate and a stake in Birmingham Airport could all be up for grabs, councillors said, as they look to fund big capital projects at a time when the national government is demanding deep spending cuts.

Mike Whitby, leader of Birmingham City Council which represents over 1 million people and describes itself as Europe's biggest local authority, said he had been approached by sovereign wealth funds and was talking with the Abu Dhabi government as he tried to forge closer ties to the Middle East.

Judge Confirms Almatis Plan To Exit Bankruptcy Protection

A bankruptcy judge on Monday confirmed Almatis Group's plan to exit Chapter 11 protection in the hands of its corporate parent, Dubai International Capital, bringing the closely watched five-and-a-half month battle for the Netherlands-based aluminum company closer to resolution.

"I think that the result is a very good one from a standpoint of all creditors," said Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan, noting that creditors fared "much better" than expected when Almatis first filed for bankruptcy protection on April 30.

Under the restructuring plan, Almatis will emerge from bankruptcy 60% owned by DIC, with junior mezzanine lenders getting 40%. The plan sets aside 10% of the new company's shares for Almatis management.

Dubai Shares Advance as FTSE Inclusion Boosts Confidence; Arabtec Climbs - Bloomberg

Dubai shares climbed to the highest in more than four months as the outlook for corporate earnings improved amid increased investor confidence after the FTSE Group listed the United Arab Emirates as an emerging market.

Arabtec Holding Co., the biggest construction company in the U.A.E., rose to a three-month high after Kuwait’s Global Investment House gave the company a “buy” recommendation. Aramex PJSC, the Middle East’s biggest courier company, advanced to a more than two-year high. The DFM General Index jumped 0.6 percent to 1,701.15 at the 2 p.m. close in Dubai, bringing the gain for the month to 14.6 percent.

“The inclusion of U.A.E. stocks in FTSE’s secondary emerging markets index has improved investor sentiment as we approach the earnings season,” said Ziad Dabbas, a financial analyst at National Bank of Abu Dhabi PJSC, the U.A.E.’s second- largest lender by assets. The rally was “spurred by the Dubai World agreement with creditors earlier this month and helped by the FTSE inclusion.”

Burgan Bank 10-yr bond price talk at low 8 pct | Reuters

Early price guidance on Kuwait-based Burgan Bank's (BURG.KW) 10-year lower tier II bond issue is in the low 8 percent range, two market sources said on Tuesday.

Burgan Bank is the commercial banking arm of Kuwait Projects Co (KIPCO) (KPRO.KW), the country's largest investment company by assets, which priced a $500 million 10-year bond in July at 9.5 percent. [ID:nWEA8973]

The size of the issue is still undetermined but a senior executive at KIPCO said earlier this week that Burgan Bank is looking to raise at least $300 million."

Kuwait saturated with Islamic banks, cbank gov-report | Reuters

Kuwait's central bank governor said the Gulf Arab state is saturated with Islamic banks, according to remarks published in a newspaper on Tuesday.

Sheikh Salem Abdul-Aziz al-Sabah told Arabic language daily al-Seyassah that there were five Kuwaiti Islamic lenders registered with the central bank and five conventional banks.

Saudi Arabia's Al-Rajhi Bank 1120.SE, one of the biggest Islamic lenders in the Gulf, also operates in Kuwait."

UAE banks to make Dh3bn in DW H2 provisions

The UAE banks could book up to Dh3 billion in provisions related to Dubai World's debt restructuring in the second half of this year, dampening the banking industry's performance, according to investment bank Shuaa Capital.
Sofia El Boury, a banking analyst at Shuaa Capital's Research Department, said all of the UAE banks have not come clear on their exposure to Dubai World "provisions which could range between Dh2 billion to Dh3bn in the second half considering the latest data."

"Taking into account the latest public data on the restructuring proposal terms as well as the additional general provisions taken by banks in H1 2010, we estimated that they could require up to Dh3 billion on top of the Dh 3.5bn H1 10 provision additions, Dh1.7bn of which are known to be related to DW, the neediest being Dubai-based Emirates NBD," Shuaa analysts said in a recent note.

gulfnews : IPO revival needs realistic valuations

Potential issuers need to get real about prices they can fetch if the telecoms, retail and energy sectors, as well as prized government assets, are to lead a revival in Gulf initial public offerings (IPOs).

Thin volumes and high trading volatility — sparked mainly by regional retail investors — have sunk valuations on the region's exchanges and kept international institutions on the sidelines, awaiting clarity on companies' debt challenges.

"If companies are to sell assets or equity voluntarily, we need more realism around valuations and current market conditions," said Paul Reynolds, head of equity and debt advisory at Rothschild in the Middle East.

Funding is a challenge for Iraq's $66bn projects - The National Newspaper

Iraq’s plans to build US$66 billion (Dh242.43bn) worth of housing and infrastructure projects as part of an agreement with Abu Dhabi development companies will face profound financing challenges, analysts say.

The projects would see the construction of 300,000 homes in six provinces, as well as two huge projects in Baghdad and Karbala. Bloom Properties, a company owned by National Holding of Abu Dhabi, and Al Maabar, a property development company owned by a consortium of the capital’s largest developers, have signed preliminary agreements to lead the projects, said Dr Sami al Araji, the head of the Iraqi National Investment Commission (NIC).

The developments will include healthcare and educational facilities, as well as large amounts of residential, commercial and retail space."

UAE answers Beirut rally cry - The National Newspaper

Ali Hassan left his home country of Lebanon for Dubai nearly three decades ago, and six years after the outbreak of the civil war.

As the conflict raged for another nine years, devastating the country’s infrastructure and economy and killing thousands of people, he built up a successful restaurant business in the Emirates, something that later allowed him to make 26 property-related investments back home.

Mr Hassan is one of millions of Lebanese expatriates across the world who have helped to keep the country’s property sector resilient despite years of political turmoil."

Saad Group creditors sell off debt - The National Newspaper

Creditors of the Saad Group, the Saudi conglomerate owned by Maan al Sanea, recently sold some of their debt for just 15 cents on the dollar, reflecting anxiety among banks about reclaiming billions of dollars in loans.

The sales were made about two weeks ago, according to two informed sources who declined to be identified. Most of the sales were made by foreign banks looking to exit exposures to troubled companies in the Middle East, the sources said. “The vast majority of the sellers are Asian banks, though one UK bank sold an exposure in the mid-teens [of cents],” one source said.

A representative of the Saad Group declined to comment."

Audits must be tougher, says Dubai regulator - The National Newspaper

Auditors must scrutinise company books more rigorously to guard against fraud and help restore investor confidence after a series of corporate scandals, says the chief of Dubai’s financial regulator.

While the 2001 Enron bankruptcy triggered a global overhaul of audit procedures, a series of investigations into accounting standards among local companies, including Dubai’s Damas International, has now put the spotlight on the Gulf.

Auditors and regulators needed to be given more training to better understand complex financial products used by companies, said Paul Koster, the chief executive of the Dubai Financial Services Authority (DFSA)."