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Friday, 11 March 2011

Bets on Higher Oil Prices Rational, but Irresponsible  | Arabianomics

Colin Barr at Fortune argues that the rise in oil prices is a ‘rational response’ by speculators, even though “It’s tempting to view that bet as irresponsibly driving up gas prices and endangering a tepid economic recovery.”

Barr is a seasoned industry expert and begs an interesting question here: are the speculators who are driving up oil prices acting rationally?

Our answer is that of course they are acting rationally, but they are also acting irresponsibly.

gulfnews : Ipic to raise $4.4b bonds as borrowing costs climb

Abu Dhabi's International Petroleum Investment Co (Ipic) paid a premium on its existing debt to raise $4.4 billion in bonds as turmoil in the Middle East drives up corporate borrowing costs.

Ipic priced €1.25 billion ($1.7 billion) of five-year notes to yield 5.032 per cent on Wednesday, 108 basis points more than existing dollar-denominated five-year bonds that mature a year earlier. The state-owned investment company may use the money for its €4 billion offer for the shares it doesn't already own in Spanish oil company Cia. Espanola de Petroleos SA, Fitch Ratings said on March 7.

"It's a strange time to go to the markets in part because of the Middle East crisis but I suppose they really had very little choice," Jim McCormick, the London-based head of fixed- income research for Europe, Middle East and Africa at Nomura Holdings Inc said in an interview in Dubai.

Insurance House IPO squeezes past the post - The National

The UAE's first initial public offering (IPO) in more than two years will go forward after just meeting the capital requirements necessary to list, company officials said.

Insurance House raised Dh66 million (US$17.9m) in the two weeks since offering subscriptions but reached the threshold only hours before a 5pm deadline on Wednesday.

"We had doubts that it would close," said a spokesman for Insurance House. "We crossed the Dh66m coverage midday yesterday."

Brace for $200 oil if unrest hits Saudi Arabia Jon Markman's Speculations - MarketWatch

Strong markets are supposed to rise along a wall of worry. This one was rising very nicely amid plenty of worries until investors caught a whiff of the idea that Saudi Arabia could fall victim to the unrest enveloping the Middle East.

So now stocks are slipping and crawling. It’s all about the optics. If you can see a problem, then you can ignore it. But if you aren’t sure what you see, paralysis ensues.

Any real threat that the Fahd monarchy and Sunni hegemony in Saudi Arabia could possibly come under attack would spark more than a worry. It would be thunder, lightning, a hurricane, a tornado, a tidal wave and earthquake all rolled up in one sand-colored bombshell.

New Statesman - What Qatar’s raid on RBS and Lloyds would mean for the taxpayer

The foundations are being laid for the sale of RBS and Lloyds. But if September’s banking report recommends a structural shake-up of the financial sector, what will George Osborne do?

In a manner that has become familiar, recent results from two of the banks part-owned by the UK taxpayer, Lloyds and the Royal Bank of Scotland, were received with ill-informed ire. The press fulminated at bonuses awarded to RBS staff despite the vast losses announced by the firm, while unions greeted Lloyds's £2.2bn profits with dismay. In reality, the Lloyds results weren't nearly as good as the quoted figure suggests. Meanwhile, RBS seems at last to be gaining traction in the turnaround that its chief executive, Stephen Hester, is overseeing. The Qatar Investment Authority, whose assets are estimated to exceed $65bn (£40bn), has expressed an interest in buying a stake in both banks. With this news, the question of when and how the UK government will sell down its holdings is again under the spotlight.

The Treasury has made it clear that it wishes to turn a profit on the £65.8bn it invested in the two banks. RBS is trading at roughly 10 per cent less than the 50p share price paid by the government for its stake, while Lloyds shares are down more than 15 per cent on the 74p purchase price. This gives the taxpayer a loss of almost £6bn on the investments at current market levels. Would the Qataris pay more to bolster their alreadyimpressive portfolio of European banks?

Qatar set to power further ahead - The National

Qatar's new energy and industry minister thinks the emirate's oil and gas sector can become an even greater global force.

But a lack of immediate development prospects in its "upstream" oil and gas extraction sector could present a problem.

The government has placed a moratorium on further development of the North Field, the emirate's side of the world's biggest gasfield, which it shares with Iran. The ban, in place since 2005, is not due to be lifted for at least three years.

Analysis: Islamic banks set to thrive after Qatar ban boost | Reuters

Islamic finance has been given the boost it needed in the Gulf by a Qatari ban on conventional banks offering sharia-compliant services.

Qatar's move last month draws a line in the sand between Islamic banks and their conventional peers, which control 83 percent of the region's banking assets.

Even before Qatar's shock decision, the Islamic finance industry was expected to grow by between 15 to 20 percent a year, PricewaterhouseCoopers said in a report in November. / Companies / Shipping - Singapore groups to sue Dubai World division

Three Singapore companies are suing Dubai’s Drydocks World, the ship repair unit of Dubai World, for non-payment of bills.

The cases, confirmed by the Singapore High Court, suggest that troubled conglomerate Dubai World may not be able to confine legal cases to a special tribunal set up in Dubai.

Dubai World, the government-owned conglomerate, expects to sign a $25bn restructuring deal with this week, according to its chairman, Sheikh Ahmed bin Saeed al-Maktoum.

Two units of Drydocks World, Drydocks World Singapore Pte and Labroy Shipbuilding & Engineering Pte, are being sued for non-payment of goods in four cases that are believed to be relatively modest sums. Drydocks World is in talks to restructure a $2bn loan.

Dubai World's Drydocks To Pay Trade Creditors $90M By End April -

Drydocks World LLC, the ship repair unit of the government conglomerate Dubai World, plans to pay $90 million that is due to trade creditors by the end of April, according to the company's chairman Khamis Buamim.

Buamim said the company has met with its international trade creditors this week, "and has informed them of the restructuring process that the company is currently undergoing." They were informed that they will be paid by the end of April under the terms of a debt restructuring deal.

Other obligations are still being investigated and will be paid "as long as they prove rightful and compliant with the standards and procedures" of the restructuring deal, Buamim said.

Meanwhile, Drydocks World is also in talks with its bank creditors about restructuring a $2.2 billion syndicated loan that dates back to 2007, Buamim said. He hopes to reach an agreement by the end of April.

All the Drydocks World debt being restructured dates back to the period before August 2010, and the company has been self-funded since then, Buamim said.

Buamim denied reports that Drydocks World is still being sued in the Singapore courts for non-payment of suppliers. He said the cases "have been concluded and a settlement was reached in February. These are old cases of payment orders and are not lawsuits."

Buamim said that Drydocks World and Maritime World, a related company for which he is also chairman, will be issuing a full statement by Sunday with a further explanation.

Dubai investment company takes over National Bonds - The National

Investment Corporation of Dubai (ICD) has taken over National Bonds Corporation, a Sharia-compliant investment scheme that offers monthly prizes.

The Dubai Government investment company purchased the 50 per cent of National Bonds it did not already own, ICD announced yesterday. No terms were disclosed.

National Bonds sold Dh2 billion (US$545 million) of bonds last year and has 610,000 customers, a 9 per cent increase from 2009, the company said. - Middle East: Gas leak in the house

The Riyadh International Book Fair, which closes today, has become a symbol of subtle social change in Saudi Arabia, a show of openness to foreign cultures where men and women – unusually for the kingdom – mingle in the same space as they browse newly published works.

Now in its sixth year, it is billed as the Middle East’s largest annual cultural event. But when the information minister, the liberal Abdelaziz Khojah, opened the fair at the start of the month at an exhibition hall in the capital, a group of young bearded men stormed the venue.

They ordered women, each already covered from head to toe in a loose black abaya, to hide their figures even more and chastised them for having gone out in public in the first place. Picking on Mr Khojah too, they accused him of “westernising the country”.

FT Alphaville » GCC launches a Sovereign Health Fund for Bahrain and Oman

You’re familiar with SWFs — and the damage they can cause in the wrong hands — but on Thursday Bloomberg carried news of what we’ll call a Sovereign Health Fund (SHF):

The Gulf Cooperation Council plans to set up a fund worth more than $10 billion, Kuwait’s foreign minister said, to help the rulers of Bahrain and Oman appease popular protest movements.

Reuters released more details Thursday afternoon; the amount pledged has doubled from earlier reports:

The job-generating measure, which will give $10 billion to each country to upgrade their housing and infrastructure over 10 years, was above the $10 billion to $15 billion indicated by officials during discussions this week.