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Friday, 4 February 2011

Egypt's Dollar Bonds Rebound From Record Lows as Bill Sales Set to Resume - Bloomberg

Egyptian dollar bonds rebounded from record lows this week and confidence improved in the nation’s ability to honor debts as economic growth prospects outweighed concern protests may destabilize the country.

The yield on Egypt’s 5.75 percent bond due in 2020 rose 3 basis points, or 0.03 percentage point, to 6.5 percent at 1:13 p.m. in Cairo after reaching a peak of 7.2 percent Jan. 31. The cost of insuring Egypt’s debt for five years with credit-default swaps fell less than 1 basis point to 378 after hitting 430 on Jan. 28, the highest since April 2009, CMA prices in London show. The contracts remain 76 basis points higher than before thousands of protesters took to the streets Jan. 25 to unseat President Hosni Mubarak.

“As the week progressed, markets started to react to events rationally,” Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai, said in an interview yesterday. “Investors started to realize that this may be a great bargain-hunting opportunity. The country remains a domestic growth story.”

New market at Istanbul bourse debuts with packaging firm - Hurriyet Daily

Berkosan, a Turkish company that produces packaging and insulation material, floated its shares on a new market at the Istanbul Stock Exchange, or ISE, on Friday.

Half of Berkosan’s shares started trading with a launch price of 2.04 Turkish Liras, giving the company a market value of 8 million liras. The company’s recent initial public offering, or IPO, was managed by Gediz Investment.

Active since 1993, Berkosan is the first Turkish small- and medium-sized enterprise, or SME, to float its shares at the ISE. The bourse has launched its “Emerging Companies Market,” or ECM, to attract Turkish SMEs. The ECM aims to be an organized market providing a liquid trading platform for SMEs, which have development and growth potential.

Bahrain leads rise in Mideast CDS; Lebanon CDS fall | Energy & Oil | Reuters

Debt insurance costs in the Middle East and North Africa mostly rose further on Friday, led by a 12 basis points rise in Bahrain, but Lebanon's five-year CDS bucked the trend to drop nearly 30 bps, Markit said.

Egyptian credit default swaps rose a further 4 bps to 393 bps though this is down from 18-month highs above 450 bps hit recently, the data provider said.

Bigger moves were seen in the Gulf countries, with Bahraini CDS rising 12 bps to an 11-month high of 260 bps on fears that Egypt-style unrest could spread in the oil-rich kingdoms.

Weekly Market Analysis (Week 6) — Weekly Index Review — GCC Market Analytics

The weekly market analysis pages have been updated for trading week 6 (February 5th - February 11th). Use the links below to view the individual market analysis pages:

The table below shows the market outlook based on each study.
Visit the links above to view the full analysis reports for all GCC markets.

Further reading: what next for Middle East | beyondbrics –

From the FT:

From elsewhere:

Emerging market equities: retreat or surrender? | beyondbrics –

It could be down to events in Egypt, profit-taking, or rising inflation. But the point is simple: this week investors have lost their enthusiasm for emerging markets, especially in Asia, in a big way.

In the past seven days, investors have taken $7bn out of global emerging market funds. In Asia, only one country saw any net inflows, and even that was at a significantly lower rate than the previous 4 weeks.

The biggest outflows, according to research from EPFR and Citi, came from the big three: China, India and Indonesia. Funds left China at twice the rate of the previous week. Inflows into developed world funds, meanwhile, increased.

The $7bn figure represents the third biggest weekly EM outflow on record, beaten only by exits in March 2007, and January 2008.

Egypt banks to allow transfers, limit cash withdrawals | Reuters

Egypt's central bank said it would would limit cash withdrawals by individuals but allow unlimited transfers abroad when banks reopen on Sunday after a week-long closure caused by the country's political protests.

With no resolution in sight after 10 days of violence on the streets, bankers are bracing for chaos at bank counters and dealing rooms as alarmed investors withdraw funds from accounts and flee the Egyptian pound.

One Cairo-based trader in a bank treasury said the central bank statement would calm nerves as Egypt's financial system moves into uncharted territory.

Bank Muscat asks banks to bid on planned bond issue-IFR | Reuters

Bank Muscat BMAO.OM, Oman's largest bank by market value, has invited banks to bid on arranging a planned bond issue under an $800 million programme, IFR, a unit of Thomson Reuters, reported on Thursday.

Bank Muscat said last month it will establish a Euro Medium Term Notes programme, subject to shareholder approval at a Feb. 6 extraordinary general meeting. [ID:nLDE70H1R6]

IFR said the lender is looking at a conventional bond and banks are to submit proposals by the end of February. The request for proposals from banks did not specify the amount to be issued but bankers said it could raise up to $500 million from any future issue, according to IFR.

Arab stock markets shed $49bn over unrest in Egypt - Arab News

The turmoil in Egypt had a negative effect on Arab stock markets. According to Kuwaiti asset managers KAMCO, $49 billion have been wiped off the value of shares on Arab stock markets since anti-government protests in Egypt began.

The capitalization of 13 Arab bourses plunged from $991 billion on Jan. 25, when mass protests against President Hosni Mubarak began, to $942 billion at the end of January, Agence France Presse quoted a KAMCO report as saying.

Most of the decline came from Gulf stock markets, which dropped $32 billion in value to $750 billion, with the Saudi bourse — the largest in the Arab world — diving $21 billion.

FACTBOX-Key political risks to watch in United Arab Emirates | Reuters

The cloud that still hangs over Dubai's financial future more than a year after the Dubai World debt crisis is the main risk to watch in the United Arab Emirates.

Despite political upheaval in Tunisia and Egypt, the rich federation of seven emirates remains a relatively calm haven in the Middle East, along with its neighbours Qatar, Kuwait and Bahrain.

The more immediate concern is whether investors, spooked by events elsewhere, take their money out of the region, prolonging a long-hoped-for recovery in trade and investment.

UPDATE 2-Banks take over AIG property arm Dubai assets-source | Reuters

Banks have taken over control of two Dubai properties belonging to the real estate arm of bailed-out insurer American International Group Inc (AIG.N) after it refused to pay more to cover lenders' risk, a source familiar with the proceedings said on Thursday.

The properties have been for sale since at least early 2009, part of AIG's program to dispose of assets to pay back its government rescue, but the company has been unable to find a buyer.

"They breached a valuation covenant. Banks were willing to talk, taking over the asset is always the last resort," the source said, speaking on condition of anonymity. "Banks lost their patience."

Boeing Loses Half of 737 Jet Order From Dubai Aerospace as Leasing Wanes - Bloomberg

Boeing Co. lost an order for 32 737 jets, valued at about $2.3 billion at list prices, from Dubai Aerospace Enterprise Ltd., the state-owned leasing and services company that has said it may drop some purchases.

Dubai Aerospace’s current backlog for 737s is 35, according to a monthly update yesterday on Boeing’s website, compared with 67 as of December. Separately, Boeing’s weekly order report showed 32 orders for the single-aisle aircraft had been canceled, without identifying the buyer.

Dubai Aerospace has been studying whether to scrap more orders as aircraft demand wanes, two people with knowledge of the matter said in December, after canceling plans last year to buy 47 jets from Boeing and Airbus SAS. An e-mailed request for comment to the company’s headquarters before regular business hours today wasn’t immediately returned. / Comment - The Middle East sets its own course

Pinn illustration

Once in a while unforeseen events throw into relief profound shifts in the geopolitical order. This is what has happened as the Arab uprising has swept into Egypt from Tunisia. The popular challenge to autocratic rulers has put paid to the notion that the Middle East is indifferent to freedom. It has incidentally exposed the delusions of the west.

A kind description of the response in Washington and elsewhere to the insurrection against Hosni Mubarak would be that it has been tortured. Only when the Egyptian president said he would stand down did Americans and Europeans begin to catch up with the aspirations of the pro-democracy movement. Only when violence erupted in Tahrir Square did they toughen the language.

Taken unawares, the west has temporised. The US wants an “orderly transition”, though it remains vague as to what. Britain, France and Germany favour free and fair elections – as long, that is, as the ballot box does not legitimise Islamists such as the Muslim Brotherhood.

Next dominos in the Mid East? | beyondbrics –

Investors nervously wondering which Middle East country could be wracked by political turmoil next agree on three likely candidates: Algeria, Jordan and Bahrain.

Other contenders include Yemen, Lebanon and Saudi Arabia, but the first two have been basket cases for so long that international investment is largely non-existent (although there is plenty of Gulf money in Lebanon). The latter is considered extremely unlikely to face trouble given the wealth the government can feed to its people.

On the other hand, Algeria has already seen widespread protests; Jordan’s king recently sacked his entire government and promised reforms; while Bahraini youths (mainly Shia, the majority of the population in a Sunni-ruled monarchy) have called for a day of rage on February 14.