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Wednesday, 13 October 2010

FT.com - Outlook for UAE shares remains flat

It is nearly five weeks since Dubai World announced that it had agreed terms with its creditors on a restructuring. In that time, the three markets of the United Arab Emirates have recovered ground.

From September 10, when the agreement was announced, to Tuesday’s close, the Dubai Financial Market index has risen 9.45 per cent and the Abu Dhabi General index has climbed 8.41 per cent.

The restructuring agreement has prompted a series of big UAE bond issues, including an announcement on Wednesday that Dubai Electricity and Water is returning to the debt markets. Dubai itself has carried out a sovereign issue, while Emaar, the high-profile developer and a leading stock on the DFM, has also tapped the capital markets.

FT.com - Outlook for UAE shares remains flat

It is nearly five weeks since Dubai World announced that it had agreed terms with its creditors on a restructuring. In that time, the three markets of the United Arab Emirates have recovered ground.

From September 10, when the agreement was announced, to Tuesday’s close, the Dubai Financial Market index has risen 9.45 per cent and the Abu Dhabi General index has climbed 8.41 per cent.

The restructuring agreement has prompted a series of big UAE bond issues, including an announcement on Wednesday that Dubai Electricity and Water is returning to the debt markets. Dubai itself has carried out a sovereign issue, while Emaar, the high-profile developer and a leading stock on the DFM, has also tapped the capital markets.

FT.com - Comment: Dubai in need of a stable brand

Taking the pulse of Dubai reveals a number of salient facts.

Property prices are down 60 per cent since their peak in late 2008. The market capitalisation of the Dubai Financial Market has fallen 70 per cent since its peak in early 2008, and broader investor confidence remains shaken primarily because of the emirate’s solvency concerns. However, construction has not halted completely and, though painful, the restructuring of Dubai Inc is progressing.

So how bad are things, and how far is Dubai from a return to the glory days?

Kuwait telco Zain Q3 net profit soars 96 pct | Reuters

Kuwaiti mobile telephone firm Zain (ZAIN.KW), the Gulf Arab region's third-largest in the sector by market value, posted a 96 percent rise in third-quarter net profit.

Net income in the three months to Sept. 30 was 80.7 million dinars ($286 million), according to Reuters calculations. The firm did not provide quarterly figures, which Reuters calculated based on previous financial data.

The firm made a net profit of 41.19 million dinars in the third quarter last year."

Abu Dhabi Shares Climb to May-High on Appeal for Riskier Assets; Oil Gains - Bloomberg

Abu Dhabi shares rose to the highest since May as the U.S. Federal Reserve indicated it’s ready to buy bonds to protect the economic recovery. The dollar extended losses, bolstering the appeal of riskier assets and oil.

Emirates Telecommunications Corp., the biggest telecommunications company in the Middle East by market value, climbed for a third day as al-Bayan reported the company started talks with banks to finance the purchase of a stake in Mobile Telecommunications Co. First Gulf Bank PJSC, the United Arab Emirates’ lender owned by Abu Dhabi’s ruling family, jumped 2.6 percent. The ADX General Index increased 1.1 percent to 2,743.17, the highest intraday level since May 24, at 12:57 p.m. in Abu Dhabi. Dubai’s DFM General Index advanced 0.6 percent.

“Gains in global markets helped by the Fed announcement have pushed up local shares,” said Humam al-Shamaa, economic adviser at Abu Dhabi-based Al-Fajer Securities LLC. “Stocks are cheap in the U.A.E. and investors are taking an interest in riskier assets as the dollar continues to decline.”

Etisalat Said to Seek More Than $9 Billion of Debt in Funding for Zain Bid - Bloomberg

Emirates Telecommunications Corp., the United Arab Emirates’ largest phone company, plans to borrow more than $9 billion to buy shares in Mobile Telecommunications Co., three bankers familiar with the deal said.

The financing to acquire a stake in Zain, as the Kuwaiti phone company is known, would be the largest acquisition loan by a company in the Middle East and Africa since at least 1999, according to data compiled by Bloomberg. It may take the form of a short-term bridge loan that will be replaced with longer-term financing, said the bankers, who declined to be identified as the discussions are private.

Emirates Telecom, known as Etisalat, started talks with banks to finance the deal, Al-Bayan reported today citing Chief Operating Officer Salem Al-Sharhan. Jamal Al-Jarwan, chief executive officer of Etisalat’s international investments department, couldn’t be reached for comment.

First Dubai IPO since financial crisis as DFM rises 20% from low � ArabianMoney

The Dubai Financial Market is up more than 20 per cent in value since the depths of July when ArabianMoney made a presentation in Vancouver tipping UAE equities, and today the first initial public offering for two years was announced.

Axiom, a division of the Dubai retailer Axiom Telecom which is 40 per cent owned by the Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum, said it will sell up to a 35 per cent stake by the end of the year, the first IPO in Dubai since the global financial crisis.

Qatar Telecom Said to Seek $1.25 Billion From Bond; Reopens 2016 Notes - Bloomberg

Qatar Telecom is seeking to raise between $1 billion and $1.25 billion by selling 15-year bonds and reopening last week’s issue of notes due in 2016, said two people with knowledge of the deal.

The company is selling more bonds after “high” demand and “attractive pricing” for its previous issue, it said in an e- mailed statement today. Qatar Telecom last week raised $1.5 billion from a two-part bond sale after receiving investor orders for $15 billion.

Qatar Telecom may offer $500 million to $750 million of dollar-denominated bonds due in October 2025 at a yield between 262.5 and 267.5 basis points over 10-year Treasuries, according to the people, who declined to be identified because the transaction isn’t completed. It may also offer $500 million of its existing bonds due October 2016 at a price of about 100.15 cents on the dollar, according to the people.

DEWA 6-Year Bonds May Yield About 6.7%, 10-Year Notes About 7.7% - Bloomberg

U.A.E. Plans Laws to Curb Loan Growth After Dubai Boom-Bust, Suwaidi Says - Bloomberg

The United Arab Emirates plans regulations to contain credit growth after Dubai’s real estate market boomed and then slumped, Central Bank Governor Sultan bin Nasser al-Suwaidi said.

“Mortgage loan regulations are coming,” al-Suwaidi told a conference today in Dubai. “The U.A.E. should have regulations to restrict credit growth when it reaches a certain level.”

Bank lending soared in the U.A.E. after Dubai, the second- largest emirate, opened its real estate market to foreigners in 2002, leading to a quadrupling of real estate prices. The global financial crisis caused a wave of defaults that forced U.A.E. banks to increase provisions for bad loans by 41 percent in the 12 months through August.

FT.com - Restructuring chief Birkett to leave Dubai World

Aidan Birkett, the chief restructuring officer of Dubai World, is to leave his position on Thursday after “successfully completing” the troubled conglomerate’s $23.5bn debt refinancing.

In a statement on Wednesday, the government of Dubai’s media office said that a supreme committee which has assumed the executive powers of all Dubai World’s board was now setting up a permanent management structure for the conglomerate.

More than 99 per cent of financial creditors to Dubai World have agreed to a restructuring plan that will see debts repaid over five to eight years at sub-commercial interest rates.

FT Alphaville � Standard Chartered is off to the capital races


Sheesh. How much money does one bank need?Edit HTML
Out on Wednesday – a £3.25bn rights issue from Standard Chartered.
It’s rather a surprise. StanChart undertook a £1bn share issue, also for capital-raising purposes, just 14 months ago — back in August 2009.
And the international emerging markets bank has been ├╝ber-keen to trumpet its “strong capital position.” Under the current Basel II regulatory framework, StanChart posted a core Tier 1 capital ratio of 9 per cent at the end of June. The bank was one of the few not to receive government funds or central bank liquidity in the recent financial crisis. It is, by all accounts, one of the strongest banks out there.

Three major Islamic banks considering merger with eye on Amlak - Emirates24|7

The option to merge three Islamic banks - Emirates Islamic Bank, Dubai Bank and Noor Islamic Bank - is being considered, with the idea that the merged entity will then bail out Amlak Finance, a top government source told Emirates 24|7.

“As far as we understand, there is a proposal to merge the three Islamic banks, who will then bail out Amlak,” the source said on condition of anonymity.

“The merger of the three entities will create an Islamic bank of substantial size, which can then bail out Amlak. Emaar is unlikely to put more money into Amlak,” he added.

gulfnews : Deyaar drops case against former board member

Deyaar lawyers on Tuesday surprised the Dubai Appeal Court when they dropped a graft case against the company's Emirati ex-board member claiming it incurred no damages.

In an unexpected twist of events, lawyers representing Deyaar in the civil right case handed the Appeal Court's Presiding Judge Mustafa Al Shennawi a written waiver in which they dropped the case against 41-year-old former board member, S.A., after a settlement was reached.

The written waiver confirmed that Deyaar "did not incur any damages or losses."

Airlines create jobs

European airlines opposing the expansion of Gulf rivals into their home markets may be overstating the amount of financial assistance Middle Eastern carriers receive. At the same time, they may be understating their importance in preserving European manufacturing jobs, say industry officials and analysts. While European airlines have long lobbied their governments to oppose granting additional landing slots to carriers including Emirates Airline, Etihad Airways and Qatar Airways, they have opened a new front focusing on the role of export credit assurance.

Pierre-Henri Gourgeon, the chief executive of Air France, this week upped the ante in the long-running dispute saying Europe's role as an aviation centre was "a role we need to value and defend". He asked authorities to help develop a strategy "that gives us a chance to resist". The Middle East's airlines, he said, were "very dangerous for Europe". However, Saj Ahmad, an analyst and industry commentator based in London, said European governments were keenly aware of the tens of billions of dollars these airlines were pouring into the coffers of Airbus, which has manufacturing bases in the UK, Germany, France and Spain.

"Europe cannot afford to prevent GCC airline growth within Europe because the risk of Airbus losing big orders is very real," said Mr Ahmad. The importance of Emirates Airline was made clear when it announced at the Berlin Air Show in June it had signed a US$11.5 billion (Dh42.24bn) deal to buy 32 new Airbus A380s, in a high-profile ceremony attended by the German chancellor Angela Merkel. This week, European airlines are set to take up the issue of export credit agencies in member nations of the Organisation for Economic Co-operation and Development and how they have benefited Gulf carriers. These agencies help foreign airlines finance purchases of Boeing and Airbus aircraft but do not help their home airlines such as British Airways, Lufthansa and Air France, or the big American carriers. Interest rates arranged by the export credit agencies have been as much as 4.5 percentage points lower than those arranged by American and European airlines.

Test case puts Dubai courts in legal bond

A major test for the fledgling Dubai International Financial Centre (DIFC) Courts will come this week when a judge in the wider Dubai Civil Courts decides whether to recognise a decision made there. The judge in the case, Sir John Chadwick of the DIFC Courts, ruled on September 23 that a Dh236.6 million (US$64.4m) property case filed by Taaleem against Deyaar Development and National Bonds could be heard in the courts.

But National Bonds had earlier filed a claim against Taaleem for payment in the Dubai Civil Courts, which now pits the two courts against each other. A decision is expected to be issued tomorrow. The Dubai Civil Courts uses civil law and is conducted in Arabic, while the DIFC Courts has its own laws based on common law and is conducted in English. Taaleem's lawyers filed an urgent application this week for Justice Chadwick to order National Bonds to stay its proceedings in the Dubai Civil Court.

Justice Chadwick denied the application on Monday evening, saying he expected the Dubai Civil Court would uphold an agreement signed by the two courts in December last year to establish jurisdiction. "It is far too early to reach a conclusion that the Dubai Civil Court will arrive at a conclusion that differs from the conclusion of this court," Justice Chadwick said. If there were a major disagreement between the DIFC Courts and the Dubai Civil Courts, then "steps will need to be taken to solve it". This would be likely to involve additional legislation. The DIFC, and the jurisdiction of its courts, was established in 2004.

National Bank of Kuwait Nine-Month Net Advances 11% on Expansion Strategy - Bloomberg

National Bank of Kuwait SAK, the emirate’s biggest lender, posted an 11.4 percent gain in profit in the first nine months of the year as it diversified income through its expansion strategy.

Net income increased to 225 million dinars ($795 million) from 202 million dinars in the same period last year, NBK said in an e-mailed statement today. The bank’s third-quarter profit rose 5.7 percent to 79.8 million dinars, according to Bloomberg calculations based on nine-month data provided by the company. Total assets reached 12.5 billion dinars in the nine-month period, NBK said.

“With our income sources becoming increasingly diversified, regional and international operations contributed more than 20 percent of the group’s net profits so far this year,” Chief Executive Officer Ibrahim Dabdoub said in the statement. “Whilst Egypt and Qatar remain our key markets and are performing very well, we expect further growth on the regional front and are pushing ahead with our plans to launch operations in Syria.”

Nigeria Approves $2.5 Billion Sale of Nitel to Dubai's Minerva After Delay - Bloomberg

Nigeria’s government approved the sale of the state telecommunications company to Dubai’s Minerva Group and its partners, eight months after they bid $2.5 billion for the company at an auction.

The group will pay an initial $750 million, followed by the remaining $1.75 billion within 60 days, the Abuja-based Bureau of Public Enterprises said in an e-mailed statement today. The government will sell a bond to pay outstanding wages owed to Nitel’s workers, the bureau said.

New Generation Telecom Ltd., consisting of China Unicom (Hong Kong) Ltd., Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd., won the bidding for 75 percent of Nigerian Telecommunications Ltd., or Nitel, on Feb. 16. President Goodluck Jonathan suspended the transaction on March 12 and told a committee including senior ministers to conduct further due diligence on the bidders.

Sukuk Issuers Shun Bonds Backed by Gulf Property Assets: Islamic Finance - Bloomberg

Persian Gulf Islamic bond issuers are avoiding collateral based on real estate after Dubai property prices plunged 50 percent.

Debt linked to returns from oil fields, aluminum and manufacturing plants are more popular with investors than property, Moinuddin Malim, chief executive officer at Dubai- based Mashreq Al Islami, said in an interview in Abu Dhabi on Oct. 11. “Money-making assets provide investors more comfort.”

Real-estate prices in Dubai tumbled from their peak in August 2008 after the worst economic crisis since the 1930s forced banks to tighten lending, according to Colliers International. Property, which has been used to back a $3.5 billion note by Nakheel PJSC, is typically leased out and payments to investors are usually in the form of rental income or profit streams.

AFP: Emirates denies receiving Dubai subsidies

Dubai's Emirates airlines, the Middle East's largest carrier, denied on Tuesday receiving government subsidies, hitting back at European claims that it was competing on the back of state aid.

"We have grown without subsidy through the success of our commercially driven business model and see no reason to apologise for what we have achieved," president Tim Clark said in a statement.

"When so many entities and economies around the world are being shored up by governments in order to survive, it is surprising to single out Emirates with unsubstantiated claims of being subsidised," he said.

SAMA chief says inflation not at worrying level - Arab News

Saudi Arabia’s inflation eased from an 18-month peak in September as consumer price growth slowed to 5.9 percent on an annual basis in September, from 6.1 percent in the previous month.

This puts inflation in the OPEC member at the top end of Gulf crude producers but still below record double-digit peaks seen in 2008.

Month-on-month, the cost of living rose 0.5 percent in September, the same pace seen in the previous month, although food price growth cooled from its August peak.