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Wednesday, 16 February 2011

Dubai Holding Commercial’s Rating Cut to B by Fitch - Bloomberg

Dubai Holding Commercial Operations Group LLC, a real-estate and hospitality group owned by Dubai’s ruler, had its long-term credit rating cut one level by Fitch Ratings as the emirate’s property industry slumped further.

The company’s long-term issuer default rating was reduced to B, the fifth-highest non-investment grade, from B+, Fitch said in a statement today. The rating was removed from rating watch negative and assigned a negative outlook, Fitch said.

“Fitch expects that the market prospects have deteriorated further,” especially for Dubai Properties Group operations, the agency said. The negative outlook reflects the risks Dubai Holding Commercial faces as it needs to repay a 250 million Swiss-franc bond in July and a $500 million bond in February 2012 while its ability to refinance debt externally is limited, Fitch said.

UAE Etisalat says equal royalty fees good for sector | Reuters

UAE telecoms operator Etisalat (ETEL.AD), whose rival saw its government royalty fees slashed dramatically this week, said equal fees would be positive for the sector.

Abu Dhabi-based Etisalat, the Gulf's largest telecoms firm by market value, pays 50 percent of its annual net profits to the federal government.

This week, rival operator du (DU.DU), which broke Etisalat's monopoly in 2007, announced that its royalty rate had been set at 15 percent. The news sent du shares soaring amid expectations for a doubling in 2010 profits as a result.

Gulf Investment Corp launches 600 mln rgt sukuk | Reuters

Kuwait-based Gulf Investment Corporation (GIC) has sold 600 million ringgit ($196 million) of five-year Islamic bonds in Malaysia, one of a growing number of Middle East issuers to tap this market.

GIC sold the bonds at a yield of 5.25 percent

The issue is part of a 3.5 billion ringgit funding programme that GIC has set up in the Southeast Asian country.

FT Tilt - One Dubai holding asset becomes extra-sellable(Registration)

The sale of Dubai Holding's 20 per cent stake in du, the UAE's second telecommunications operator, became a whole lot more feasible on Tuesday, after the UAE government slashed the amount of money du must pay in royalties to the federal government.

Dubai Holding, one of the three pillar companies of Dubai Inc, faces a pretty serious cash crunch as big debt payments come due in the coming year. But like the rest of Dubai Inc, its assets aren't entirely mired in the Dubai real estate crisis, and the company has the option to raise a decent sum of cash from asset sales, particularly in telecommunications. As Moody'ssaid on Tuesday:

The potential disposals relate mainly to its telecom assets. Among the three largest are its 19.5% stake in du (market value at ca. AED 2.8bn [$760m]), Axiom and Tunisie Telecom which had a carrying value of ca. AED 7bn when last valued at FYE 2009 (this compares to an estimated year-end 2010 group debt of ca. AED 14bn per year end 2010). A degree of uncertainty regarding the execution on possible disposal options remains. There is therefore scope for the liquidity and refinancing pressure to subside quickly if these disposal options were used.

UAE plans short selling draft rules soon-ministry | Reuters

The UAE market regulator will launch draft rules on short-selling "very soon", the minister of economy said on Wednesday, the latest step aimed at boosting dwindling trade and helping attract foreign investors.

Short selling is not permitted on the UAE's two markets - Dubai Financial Market DFM.DU .DFMGI and Abu Dhabi Securities Exchange .ADI -- but some international firms operating outside the jurisdiction of the regulator, the Securities and Commodities Authority (SCA), provide short selling against their own inventory, analysts said.

"The SCA is conducting research on short selling, lending and borrowing securities and options and the SCA is about to launch a draft of this legislation very soon," Sultan bin Saeed al-Mansoori said in a speech in Abu Dhabi.

ANALYSIS - Bahrain unrest may have regional, financial impact

Bahrain may be tiny, and fairly insignificant as an oil producer, but nearly $10 billion parked in mutual funds in the kingdom mean plenty is at stake if protests inspired by Egypt and Tunisia spiral out of control.

Religious leaders camp out at the Pearl Roundabout, a famous landmark of Bahrain, in the heart of its capital Manama February 15, 2011. (REUTERS/Hamad I Mohammed)
It is the Gulf Arab state seen as most vulnerable to unrest because of deep-rooted discontent among its majority Shi'ite population against the ruling Sunni dynasty, the al-Khalifas. The populace complains of economic hardships, lack of political freedoms and discrimination in jobs in favour of Sunnis.

This has always sat awkwardly with its status as a regional banking, trading and Islamic finance hub, but its advantages, as a diversified economy and relatively liberal society, have outweighed the risks -- thus far.

Planned Bahrain sovereign bond seen delayed amid unrest-bankers | Reuters

A planned $1 billion Bahrain sovereign bond issue is likely to be delayed as anti-government protests shook the Gulf Arab kingdom on Wednesday while jittery investors, worried about their exposure, sold off state bonds.

Bahrain's debt insurance costs hit fresh 18-month highs on Wednesday as thousands of Shi'ite protestors, inspired by popular revolts that toppled rulers in Tunisia and Egypt, poured into Bahrain's capital to mourn for a second demonstrator killed in clashes this week. [ID:LDE71F002]

Bahrain had asked banks to bid on securing the mandate for a proposed sovereign bond issue early this month.

MIDEAST MARKETS-Bahrain unrest hits mkts; foreign funds exit | News by Country | Reuters

Gulf Arab markets fell on Wednesday as a third day of unrest in Bahrain raised political risk premiums in the world's top oil exporting region.

"There is definitely some panic, as you can see in the markets today," said M.R. Raghu senior vice president for research at Markaz in Kuwait. "The amount of uprising we are seeing in the Middle East is a serious concern for foreign investors. They are likely to pull more money from the markets to be on the safer side."

Thousands of Shi'ite demonstrators, inspired by popular revolts that toppled rulers in Tunisia and Egypt, poured into Bahrain's capital to mourn for a second protestor killed in clashes this week, while the cost of insuring Bahrain's debt against default rose to a new 18-month high.

FT Tilt - Mubadala and the lure of the Abu Dhabi backstop(Registration)

There is an important credit dimension to Wednesday's announcement that ATIC, the Abu Dhabi government-owned technology investor, has been formally merged into Mubadala, the sovereign investment fund: ATIC, which owns the Globalfoundries chip-making business, is now very solidly under the credit guarantee of the Abu Dhabi government.
While most Abu Dhabi government-backed ventures are considered by the market to have the implicit guarantee of the state - and by connection, its enormous oil reserves - only four have been explicitly named by the government as guaranteed, and Mubadala is one of them. (The other three are the diversified energy investor IPIC, developer TDIC and energy company Taqa.)
As Moody's said in a note following the announcement:
The transfer of ownership, in our view, underlines once more the government's extremely strong commitment to Mubadala. The government has shown a strong track record of support for Mubadala, including regular, sizable equity injections to fund Mubadala's acquisitions and investments, as well as other business support, such as land grants and project sourcing. As a wholly owned entity of Mubadala, the budgetary requirements of ATIC, stemming also from its sizable investment program, will be incorporated into Mubadala's annual budget submission to the government.
That means ATIC, and by extension Globalfoundries - which is building a $4.6bn microchip factory in upstate New York and plans to build another in Abu Dhabi - now has access to some of the cheapest financing in the chip industry. The Abu Dhabi government budget (details of which remain largely unpublished) is a nice place to get your financing from, and if the company heads to the markets, it does so with Mubadala's AA credit rating behind it.

Egyptian bank shutdown and strikes hit industry | Reuters

Egyptian manufacturers have cut output because banks are closed while labour unions have taken the country's revolution as a cue to stop work and demand better pay and conditions, industry managers said on Wednesday.

The military-backed government has slashed its forecast for economic growth and the army urged Egyptians on Monday not to strike, appealing to their sense of national duty. Military officials say stoppages would be disastrous for the economy.

But unions, emboldened by the overthrow of President Hosni Mubarak last week, are still pressing their demands. More than 12,000 workers at state-owned Misr Spinning and Weaving went on strike on Wednesday. In the coastal city of Damietta, about 6,000 spinning and weaving workers were also striking.

Islamic megabank gets Bahrain, Malaysia approvals | Reuters

A long-touted Islamic megabank has received approval from Bahrain and a preliminary green light from Malaysia to begin operations, an organizer said on Wednesday.

Saudi Arabia's Sheikh Saleh Kamel -- who is founder and chairman of Bahrain-based Islamic bank Al Baraka BARKA.BH and spearheaded the megabank initiative -- said the venture is still in discussions with Qatar to obtain a licence.

The entity will likely have an authorized capital of $3 billion, a third of which will be raised in a private placement.

MENA stock markets - February 16, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
DFM (Dubai Financial Market)
ADX (Abudhabi Securities Exchange)
KSE (Kuwait Stock Exchange)
BSE (Bahrain Stock Exchange)
MSM (Muscat Securities Market)
QE (Qatar Exchange)
LSE (Beirut Stock Exchange)
EGX 30 (Egypt Exchange)
ASE (Amman Stock Exchange)
TUNINDEX (Tunisia Stock Exchange)
CB (Casablanca Stock Exchange)
PSE (Palestine Securities Exchange)

Egypt Stock Exchange Stays Closed, Won't Annull Transactions - Bloomberg

Egypt Bourse Extends Delay as Banks Closed, Al Arabiya Says

The Egyptian stock exchange, seen here, will stay closed into next week, Al Arabiya television said. Photographer: Andrew Burton/Bloomberg

The Egyptian Exchange, shut since Jan. 27 amid anti-government protests, will stay closed into next week and honor transactions that sent the EGX 100 Index tumbling on the last trading day, Al Arabiya television said.

Exchange officials, confronted by investors angry about stock losses, said yesterday they would weigh annulling trades that led the EGX 100 down 14 percent, the biggest one-day drop in more than two years. Chairman Khaled Seyam ruled out such a move, saying it would be illegal, Al Arabiya reported today.

Egyptian shares have climbed in London and the U.S. since the Cairo exchange closed as President Hosni Mubarak bowed to protesters seeking his resignation last week and ceded power to the military after 30 years in office. Seyam and Hisham Turk, a spokesman for the bourse, didn’t answer calls and text messages to their phones today.

Abu Dhabi to Purchase Outstanding Shares of Spain's Cepsa for $5.4 Billion - Bloomberg

IPIC of Abu Dhabi to Buy Rest of Spain’s Cepsa $5.4 Billion

A Cia. Espanola de Petroleos SA refinery and petro-chemical compound is illuminated at night, in San Roque, Spain. Photographer: Xabier Mikel Laburu/Bloomberg

Abu Dhabi’s state-owned petroleum holding company agreed to buy Total SA’s stake in oil refiner Cia. Espanola de Petroleos SA as part of a 3.97 billion- euro ($5.37 billion) offer to increase its stake in the Spanish company to 100 percent.

International Petroleum Investment Co. said it will pay 28 euros a share in cash, a 23 percent premium to yesterday’s closing price in Madrid, in a regulatory filing today to Spanish authorities. The company already has a 47 percent holding. The price assumes a 50 cent-a-share dividend.

“It shows that there is probably higher value to industrial partners than to equity holders,” said Lydia Rainforth, an analyst at Barclays Capital in London, who has a 22 euro per share price target on the stock. “There is a market for complex, strategic and coastal assets” in the refining business.

Leighton Blames Dubai Venture For Profit Slump

Australia's largest construction company Leighton Holdings Ltd. (LEI.AU) on Monday largely blamed its troubled joint venture in Dubai for a 25% slump in first half profits, calling into question its strategy to expand in the Middle East ahead of the global financial crisis.

A writedown of its 45% stake in the Dubai, United Arab Emirates-based joint venture, Habtoor Leighton Group, took $100 million Australian dollars ($100.6 million) from its net profits, while the Sydney-based company cut its full-year earnings outlook by 5.8% to A$480 million, sending shares falling an initial 60 cents to A$30.11 before rebounding to close the day at A$30.97, up 0.85%.

The impairment is one of the most significant so far recognized by an international construction company in the Gulf emirate, where the financial crisis brought a local real estate boom to a screeching halt at the end of 2008 and forced the city state's rulers to seek financial assistance from oil-rich neighbor Abu Dhabi. Both sheikdoms form part of the United Arab Emirates.

gulfnews : Foreigners could hold 100% stake in UAE companies

Foreign investors are likely to be allowed a 100 per cent ownership in companies, according to a draft law, a top government official said.

A draft Companies Law is with the government for consideration, Sultan Bin Saeed Al Mansoori, UAE Minister of Economy, told reporters on the sidelines of a conference in Abu Dhabi.

He said, it will go through a process of scrutiny and verification and ammendments till it is passed by the government.

Egypt Generals Running Day Care Adds Profit Motive to Political Transition - Bloomberg

Egypt Generals Running Child Care Transition Profit Motive

The Egyptian military, which promises to steer the nation to a new democratic future after the resignation of President Hosni Mubarak , has its own economic interests to protect as well. Photographer: Marco Longari/AFP/Getty Images

The Egyptian military, which promises to steer the nation to a new democratic future after the resignation of President Hosni Mubarak, has its own economic interests to protect as well.

The armed forces have a substantial stake in the civilian economy through a host of government-owned service and manufacturing companies, at least 14 of them under the auspices of the Ministry of Military Production. Their websiteslist product lines that include civilian goods.

Military-run companies are in such businesses as janitorial services, household appliances, pest control and catering. El Nasr Company for Services and Maintenance, for instance, has 7,750 employees in such sectors as child care, automobile repair and hotel administration, according to its website. Other military companies produce small arms, tank shells and explosives -- as well as exercise equipment and fire engines.

FT Tilt - Abu Dhabi formalises the ATIC-Mubadala connection(Registration)

One of Abu Dhabi's most ambitious investment projects is its push to become a major player in the semiconductor industry, and eventually, a hub for semiconductor manufacturing.

That push has been led by two separate, but highly connected, investments. Mubadala, Abu Dhabi's strategic investment company, became the largest shareholder in AMD, Intel's only real competitor in the chip industry. And a new government-owned company, ATIC, spun off AMD's chip manufacturing business into a new company, Globalfoundries, in a joint-venture with AMD.

Globalfoundries, cashed up from their new Abu Dhabi owners, went on to buy out Singapore's Chartered Semiconductor and became the third biggest chipmaker in the world. The company says it will build a microchip fabrication plant in Abu Dhabi by 2016.

Saudi awards $2.5 bln railway contracts to local firms | Reuters

Saudi Arabia's Railways Organisation awarded 9.4 billion riyals ($2.5 billion) in contracts to Saudi Bin Laden Group and Saudi Oger to build four railway stations in the western region, it said on Wednesday.

The Saudi Railways Organisation planned Haramain Railway will link the spiritual heart of Islam, Mecca with Medina, its second-most sacred city, and then to the kingdom's commercial hub on the Red Sea coast, Jeddah.

Bahrain debt insurance costs rise-Markit | Reuters

The cost of insuring Bahrain's debt against default rose to a new 18-month high in the five-year credit default swap market on Wednesday, as protests continued in the country.

Thousands of Shi'ite demonstrators, inspired by popular revolts that toppled rulers in Tunisia and Egypt, poured into Bahrain's capital to mourn for a second protestor killed in clashes this week.

Bahrain's five-year credit default swaps rose 16 basis points to 275 bps, according to Markit, hitting their highest since Aug 2009.

Emaar fourth quarter profit misses estimates -

Emaar Properties, the biggest developer in the UAE, reported a fourth-quarter profit that was lower than analysts estimated on writedowns related to troubled lenders Amlak Finance and Dubai Bank.

Net income declined 62% to AED274 million (US$75 million) from AED720 million a year earlier, the company said in a statement. The average estimate of six analysts in a Bloomberg survey was for a profit of AED662.5 million. Impairments and provisions more than doubled to AED417 million.

Emaar, which owns a 45% stake in Islamic mortgage provider Amlak, has outstanding loans of AED772.6 million to the company, which was barred from trading in November 2008. Losses from the company’s financial operations were partly offset by rising rental income from hotels and apartments.

Emerging markets: double or nothing | beyondbrics –

Investors may be getting out of most emerging markets, but they seem to be doubling up on those they still like. February’s survey of fund managers from Bank of America Merrill Lynch shows a collapse in overall allocation to emerging markets, but a significant increase in a handful of countries.

The big regional winners are in eastern Europe and the Middle East, while the big loser is Latin America.

On a country level, Russia stands out for its popularity. Eighty-eight per cent of survey respondents are overweight the market, up from around 50 per cent in January.

MIDEAST DAYBOOK: Egypt Trading Cancellation; Union Properties - Bloomberg

Egyptian regulators, confronted by investors angry over stock losses and a closed exchange, said they will weigh the cancellation of transactions that led to the biggest tumble in the EGX 100 Index in more than two years.

Bahraini protesters may rally for a third day today after the funeral for the second demonstrator killed during clashes in the Persian Gulf state.

Investment Dar Co.’s agreement to change Shariah-compliant debt terms last week may help revive sukuk sales after their 2010 tumble.

Turkey's Central Bank Leaves Benchmark Repo Lending Rate at 6.25 Percent - Bloomberg

Turkey’s central bank left its benchmark interest rate unchanged, after two months of cuts, to assess whether curbs on lending are reducing consumer demand.

The bank in Ankara kept its one-week repo lending rate at a record low of 6.25 percent, according to an e-mailed statement today. Six of seven economists surveyed by Bloomberg this week had predicted no change. The bank will release minutes of the meeting within eight working days.

Governor Durmus Yilmaz unexpectedly lowered the rate in December and January, seeking to deter short-term capital inflows and weaken the lira. He said the easing would be more than offset by higher reserve requirements for banks that will slow lending. The central bank said its tracking the impact of the reserves increases, according to today’s statement.

Egypt Bourse Weighs Canceling 14% Drop in EGX 100 Amid Protests - Bloomberg

Egyptian regulators, confronted by investors angry over stock losses and a closed exchange, said they will weigh the cancellation of transactions that led to the biggest tumble in the EGX 100 Index in more than two years.

Individual equity holders, who accounted for 48 percent of all trading on the Egyptian Exchange last year, jammed into a meeting in Cairo with bourse Vice Chairman Mohamed Farid Saleh yesterday, demanding changes in regulation and management before the market resumes operations on Feb. 20. The exchange shut after the EGX 100 plunged 14 percent on Jan. 27.

Egyptian shares have since climbed in London and the U.S. as President Hosni Mubarak bowed to protesters seeking his resignation last week and ceded power to the military after 30 years in office. Bourse officials said they are studying scrapping transactions from the last day of trading and will delay the planned opening for at least a third time. Unexpected developments could put trading off even longer, Saleh said.

Swiss start to disclose Mubarak assets - The National

Banks in Switzerland are disclosing the assets of the former Egyptian president Hosni Mubarak and his "associates", says the Swiss foreign ministry.

Last week, the government said it had frozen "any potential assets" belonging to Mr Mubarak, as well as 10 members of his family and other people. The move followed Switzerland's decision to freeze the assets of Tunisia's ex-president Zine al Abidine Ben Ali and his entourage after he was forced out of power last month.

A spokesman for the Swiss foreign ministry said yesterday Swiss banks were beginning to reveal the extent of Mr Mubarak's holdings and his entourage for the first time, although he would not give a figure.

Crescent Group to strengthen Russia ties on energy - The National

Sharjah's Crescent Group has expanded its ties with Russia through an alliance with the country's biggest power company.

This week in Abu Dhabi, Crescent Investments, a unit of Crescent Group, signed a strategic co-operation agreement with Inter Rao, as the Russian state-controlled electricity generation and trading enterprise opened a regional office in the UAE capital.

"We can broaden our footprint through a series of projects in the Mena region," said Boris Kovalchuk, the chief executive of Inter Rao. The project would be run from the new Abu Dhabi office, he added.

How much oil does Saudi Arabia actually have?

Does anyone know how much oil Saudi Arabia has left? Last week a series of US diplomatic cables from 2007-2009 and released by WikiLeaks suggested that senior US embassy staff were warning Washington that reserves could be 40% less than stated and that "peak oil" might be imminent.

The source of this new information was Sadad al-Husseini, a senior geologist and former head of exploration at the Saudi oil monopoly Aramco who, the cables revealed, disputed the official figure of 716bn barrels of total reserves. In further cables, the US embassy suggested that Saudi Arabia would not be able to prevent oil prices from going through the roof because it could not produce enough.

The Guardian published the four cables online, which ignited debate in the oil industry, the markets, the press and the peak oilists.

Saudi telco Atheeb says files suit against STC | Reuters

Saudi Arabia's Atheeb Telecom 7040.SE said it filed a lawsuit against Saudi Telecom (7010.SE) (STC) for allegedly violating regulatory and anti-monopoly laws, according to a bourse statement.

Atheeb's Chairman Prince Abdul-Aziz bin Ahmed bin Abdul-Aziz told Reuters the firm was prevented from providing some of its services which resulted in an estimated loss of $174.9 million.

"It cost us (estimated losses) of 656 million riyals ($174.9 million) since the start until the third quarter," he said.

QInvest mandated for - IPO -s of two Qatari firms in 2011-

QInvest, the investment bank that’s 49 percent owned by Qatar Islamic Bank, is working to conclude two “reasonable size” mandates for initial public offerings by local companies this year, its chief executive officer said.

“We are looking to conclude one transaction in the second-quarter of 2011, and the other in the second half,” Shahzad Shahbaz said in a telephone interview on Tuesday. The size of the IPOs is yet to be determined, he said.

QInvest, Qatar’s largest investment bank, is still planning to offer its shares to the public as it pursues expansion in the Middle East, Shahbaz said. “We are looking at early 2012, in the first half, depending on market conditions.” he said. “If there was a good story there would be appetite in the market.”

Middle East ETFs Tumble Amid Spreading Unrest | ETF Trends

As the Egyptian saga comes to a denouement, the focus is shifting to other Middle East nations. An increase in demonstrations and violent protests in the Middle East threatens to destabilize the region’s economies, and Middle East exchange traded funds (ETFs) are spilling on the reports.

The recent wave of unrest in the Middle East stem from economic problems, such as high unemployment, growing population of youths, a wide discrepancy between the rich and poor and autocratic regimes that enrich a small few at the expense of the majority, according to MarketPlace.

CNN provides a clearer picture on what is happening in the various countries in the Middle East and North Africa. Though many of these countries aren’t any part of Middle East ETFs, the contagion effect is definitely being felt as a result of what’s going on:

UAE most likely destination for Mubarak’s billions -

The UAE is the most likely destination for the assets of ousted Egyptian president Hosni Mubarak, Middle East experts have said, thought the 82-year-old himself may still be in Cairo.

The former ruler is thought to command a family fortune of up to $70bn, and will be searching for a safe haven for his wealth, said Christopher Davidson, professor of Middle East politics at Durham University.

“I suspect [Mubarak’s sons and wife] will be headed to the UAE and I suspect their assets are there,” he told Arabian Business.

gulfnews : Union Properties full-year loss more than triples from 2009

Union Properties, Dubai's third largest real estate developer by market value, said yesterday its full year net loss more than tripled to Dh1.5 billion from Dh498 million a year ago.

Revenues in the 12-month period almost halved to Dh2.9 billion, from Dh4.4 billion in 2009, the company said in a statement posted on the Dubai Financial Market's website. Earnings per share for 2010 were Dh0.45 compared with Dh0.15 in 2009.

The company made a profit of Dh186 million in 2010, against Dh372 million the previous year. Its total assets reduced to Dh14.9 billion from Dh17.4 billion in 2009 while shareholders' equity decreased to Dh3.9 billion from Dh5.4 billion.