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Wednesday, 13 April 2011

Abu Dhabi's Mubadala launches US$1.5 dual-tranche bond -

Abu Dhabi-owned investment fund Mubadala Development Co on Wednesday launched a dual-tranche US$750 million 5-year and US$750 million 10-year bond, IFR said.

Mubadala launched the 5-year bond at 180 basis points over U.S. Treasuries, and the 10-year at 210 basis points over U.S. Treasuries, according to IFR Markets, a Thomson Reuters unit.

This compares to price guidance of +185bp and +210bp, respectively. - Citadel adjusts to Egypt’s new realities

For Cairo-based Citadel Capital, 2011 was to have been the year that the private equity fund, Africa’s largest, put the financial crisis behind it. After years spent focused on managing its portfolio, the group was planning some exits and pursuing significant new deals.

Instead, tear gas in Tahrir Square and the fall of Hosni Mubarak, the former president, has sent the operation, with $8.6bn of investments under management, back into defensive mode.

“This is a delicate period,” says Hisham El-Khazindar, Citadel’s managing director and co-founder. - Nakheel edges closer to debt deals

It is more than a year since Nakheel, the developer behind some of Dubai’s most ambitious property projects, set out terms for the restructuring of $10.5bn in debts – but investors still have at least another month to wait before a final deal is signed.

The government last month completed a $25bn restructuring deal with financial creditors of Dubai World, Nakheel’s holding company, ending a damaging period of uncertainty for the emirate.

The restructuring of Dubai World and its entities comes amid broader efforts to extend maturities at other state-backed companies, including Dubai Group – a unit of Dubai Holding, a conglomerate owned by the ruler – which is close to reaching a deal on $6.2bn worth of debt.

e4e — Education for Employment: Realizing Arab Youth Potential

e4e — Education for Employment: Realizing Arab Youth Potential

The Implications of Zain’s General Meeting « Alpha Dinar- talking Gulf finance

Zain’s annual general meeting convened yesterday, where major change occurred to the board, and the company in general. Khalifa Ali Al Khalifa and Aida Salem Al Ali departed the company’s board, and were replaced by Bader Naser AL Kharafi and Shaikha Al Bahar. The implications of the change in Zain’s board has the following implications:
More Homogenous Board:
With talks of Etisalat buying 46% of Zain and the sale of Zain Saudi, opposition voices grew. These voices were coming from the Salem Al Ali and Ali Al Khalifa blocks. With their representatives out of the board, being replaced by individuals loyal to the Al Kharafi block, such deals can go through with less hassle, as the board members now are all on the same page.
The Quarrel of the Economic Elite:
Three of Kuwait’s economic elite quarreled over Zain: Al Kharafi family, Ali Al Salem, and Ali Al Khalifa. Al Kharafi emerged victorious, which may prompt certain repercussions. It has created “bad blood” between the economic blocks, which may lead to further quarrels in different areas.
Overall Implication of Kuwait’s Economy:
As Zain is the biggest company listed on the Kuwait Stock Exchange, it has become a bellwether of the overall economy. As we have seen in the past, the company’s stock can lift the stock market, and vice-versa. If Zain decides on selling more of its assets and distributing the proceeds (which is now an easier task after the departure of the opposition), the extra liquidity will be positive on the overall market.
Zain’s Future:
Zain’s board will serve for three years. These three years are crucial, as now Al Kharafi have no barriers to fulfill their strategy and goals. They can either grow the company and create value to investors or sell off the company’s assets, distribute the proceeds, and shrink the company.

The day of Saudi collapse is not near | The Oil and the Glory

As turmoil has engulfed the Middle East and North Africa, much attention has focused on Saudi Arabia -- if trouble spread there, traders have worried, the global economy could dive into a far more serious recession than the 2008 financial collapse. Nawaf Obaid, a senior fellow at the King Faisal Center for Research and Islamic Studies and a doctoral candidate at King's College London's Department of War Studies on the subject of the rise of Saudi nationalism, thinks the fears are overblown. He kindly agreed to write a guest column, which follows.
Reports in recent weeks have suggested that the mass protests occurring in Arab nations will soon spread to Saudi Arabia. There has been coverage of Facebook pages established by activists calling for a "day of rage," and a "day of revolution." Large, front page articles, illustrated with pictures and charts, have asserted that it is only a matter of time before massive upheavals will bring down the Saudi monarchy. The BBC has reported that the Saudi downfall is inevitable, and weighing heavily on global energy markets, where a fear premium had added 15 percent to the price of oil.
These assertions have been grossly exaggerated: 17,000 Facebook fans or "protesters" do not necessarily translate into 17,000 Saudi rioters, because at the very least it is impossible to verify how many of them actually lived in theKingdom. One cannot forecast events based on a count of virtual fans at a social network.

Rasmala to merge Saudi units, cut costs amid Mideast crisis -

Rasmala Holdings Ltd a Dubai- based financial holding company, plans to merge operations in Saudi Arabia in the next quarter after cutting three jobs as it seeks to decrease costs amid the regional crisis.

“We are entering a period in the region where we are more cautious,” Ali al Shihabi, chairman of Rasmala Investment Bank Ltd., said in a phone interview on Wednesday. “We are expecting 2011 to be a difficult year. Volumes could be low, foreign capital flow might be less, and we are approaching that with caution.”

Uprisings in the Middle East and North Africa that ousted leaders in Tunisia and Egypt have hurt financial markets in the Persian Gulf, with the DFM General Index retreating 4.6 percent in the first quarter. Rasmala reduced the number of its employees in November to lower costs by as much as 25 percent and reorganize, Shihabi said that month.

MENA stock markets close - April 13, 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)

Mubadala bond trading at tiny premium in grey mkt - Maktoob News

A dollar-denominated bond issue by Abu Dhabi investment fund Mubadala, due to price on Wednesday, was trading in the grey market at a premium of between 0.1 and 0.5 cents to the price guidance, traders said.

State-owned Mubadala, which plans to invest $16.3 billion in 2011, is issuing a dual-tranche five-year and 10-year dollar-denominated bond, which the market expects could raise between $1.5 billion and $3 billion.

Price guidance issued on Tuesday indicated the five-year tranche will be priced in the area of 185 basis points over U.S. Treasuries.

Saudi Arabia: Looking to a boom in 2011 - The Economy News

Standard Chartered have today said that they foresee an economic boom for Saudi Arabia in 2011.

"We expect growth in Saudi Arabia to reach 6.6% in 2011 on the back of higher hydrocarbon prices and more government spending. Saudi Arabia has enough spare capacity to compensate for oil production shortfalls elsewhere, and higher oil production will boost the economy," says a note from Standard Chartered analyst Shady Shaher.

At the same time, higher oil prices make it easier for Saudi Arabian authorities to increase government spending more or less at will.

Morocco Royal holding's assets soar amid protests | Reuters

An investment holding company controlled by Morocco's royal family has announced a sharp surge in net profit and assets in 2010 amid street demands for King Mohammed to reduce his business and political clout.

National Investment Co., or SNI, made a consolidated net profit of 8.28 billion dirhams in 2010, up from 2.38 billion in 2009, according to financial statements published over the weekend in Le Matin, one of Morocco's most pro-establishment newspapers.

Siger, the firm that groups the main business interests of the Moroccan royal family, holds a stake of around 60 percent in SNI, market sources said. Officials at SNI could not immediately be reached to confirm the figure.

CTV News | Where is Saudi’s excess capacity when you need it?

Exactly how high do oil prices have to rise before Saudi Arabia will start using it supposed three million barrels of spare capacity?

Does Saudi Aramco intend to stay on the sidelines watching Brent crude prices - already $120 per barrel - climb as high as $200 (U.S.) per barrel, while blaming speculators for distorting market fundamentals?

Or is the emperor simply wearing no clothes? Is Saudi Arabia, and by extension, OPEC, already tapped out, barely struggling to make up for the loss of 1.3 million barrels of oil exports from a now non-producing, war-torn, Libya.

Commercial Bank of Qatar, Doha Bank Drop on Credit Suisse Cuts - Bloomberg

Commercial Bank of Qatar (CBQK) and Doha Bank QSC (DHBK) retreated to the lowest level this month after the lenders had their stock recommendations cut to “neutral” from “outperform” at Credit Suisse Group AG.

Shares of Commercial Bank, Qatar’s second-biggest bank by assets, dropped 1.9 percent to 73.1 riyals, the lowest intraday level since March 10 at 12:04 a.m. in Doha. Doha Bank, Qatar’s third-largest bank by assets, retreated 4 percent to 53.2 riyals, the lowest since March 20.

Commercial Bank was assigned a share price estimate of 83 riyals and Doha Bank a share price estimate of 62 riyals.

Oil rebounds to above $122 on Libya conflict, Kuwait export halt - The Economic Times

Brent crude rebounded to above $122 on Wednesday, halting a two-day decline, on fears that the Libya conflict could settle into a bloody stalemate, while a sudden disruption in Kuwaiti oil exports boosted sentiment.

The market shrugged off concerns raised by the IEA and IMF earlier this week that high oil prices are beginning to dent oil demand, as well as a Goldman Sachs forecast that Brent prices would decline sharply.

ICE Brent crude for May rose $1.22 to $122.14 a barrel by 0642 GMT after hitting a high of $122.19. U.S. crude for May delivery reversed earlier losses, and climbed 66 cents to $106.91 a barrel.

Global Arab Network | Moody's places Kuwait Projects Company Holding ratings on review for downgrade | Economics

Moody's Investors Service has today placed on review for possible downgrade the issuer ratings for Kuwait Projects Company Holding K.S.C. (KIPCO) and for Kuwait Projects Co. (Cayman) as well as the instruments rating under the USD EMTN programme and KIPCO's short-term issuer rating of P-3, Global Arab Network reports according to a press statement.

Moody's decision to place the ratings on review follows a more detailed assessment of KIPCO's year-end 2010 financial data. The trend line of some key metrics -- cash coverage and market-value leverage (MVL) -- indicates a weakening against prior years. Whilst MVL at 22% (19% at FYE

2009) remained within Moody's expectations for the Baa2 rating category, i.e. below 25%, cash coverage weakened from the 2009 year-end level of

Mideast MAs plunge 60 in Q1 |

Merger and acquisition (M&A) transactions in the Middle East totaled 119 with a combined value of $3.6 billion in the first quarter of 2011, Zephyr Quarterly M&A Report issued by Bureau van Dijk (BvD) said Monday. It noted that the results were “”respectable despite unrest in the Middle East and North Africa.”

According to Zephyr data, deal value weakened 22 percent from $4.6 billion in Q4 2010 and was 60 percent lower than the $9 billion recorded in Q1 2010.

However, the Q1 2011 result was flattered by low valuations in Q3 2010 and frail deal activity in Q3 2009.

KIPCO repays $350m bond in full, on time

KIPCO - the Kuwait Projects Company - announced today that it has repaid its debut $ 350 million five-year bond issued under its $2 billion Euro Medium Term Note (EMTN) bond programme.

KIPCO’s EMTN programme was launched on 12th April, 2006. The issue — listed on the London Stock Exchange — was the first by a private sector corporate from the Middle East. The programme offered international investors their first opportunity to diversify from the US dollar Floating Rate Notes usually offered by banks in the Gulf region at that time.

Since the debut issue under the EMTN programme in April 2006, KIPCO has been a frequent and successful bond issuer, gradually extending the term of its issues.

Supply Destruction in the Oil Market

--This could be the dip you’ve been looking for. Goldman Sachs released a note overnight warning of “nascent signs of oil demand destruction”. This is another way of saying that when oil costs over $100/barrel, people find a way to use less of it. The Goldman note coincided with a tactical retreat by commodity investors.

--NYMEX crude was down another three per cent yesterday and is now down six per cent in the last two days. It joins oil, gold, and copper in the commodities complex in the correction phase. Some of the wire services report that because high oil prices damage global growth rates, you don’t need to hedge against inflation anymore with precious metals.

--This is wrong. - IFC to launch $2bn skills initiative

The International Finance Corporation, the private sector development arm of the World Bank, will on Wednesday launch a $2bn initiative aimed at narrowing the skills gap among young people in the Arab world.

The region suffers from the highest youth unemployment in the world at more than 25 per cent, while labour force participation rates are only 35 per cent compared with 52 per cent internationally, according to a report by McKinsey, the consultants, commissioned by the IFC.

Such is the demographic profile that just to maintain current average unemployment rates, the region needs to create an additional 35m-40m extra jobs, the report said.

gulfnews : Opportunity in the Saudi oil conundrum

For all the principled criticism that "Gulfarism" (the recent expansion of welfare in the GCC states) has received, it looks like the most effective argument against it maybe petro-realpolitik.

The International Institute of Finance (IIF) believes that the recently announced social benefits in Saudi Arabia totalling $130 billion (Dh477 billion) will increase the target oil price it needs to balance its budget to $88 from $68 last year.

The IIF notes that many components of these benefits, such as new public sector jobs and unemployment benefits, are effectively irreversible and forecasts that Saudi Arabia will need oil to be somewhere between $100-$110 by 2015.

Aldar board to undergo changes - The National

The board of Aldar Properties, Abu Dhabi's largest development company, is undergoing major changes.

Ahmed Ali al Sayegh, who has served as chairman since the company's launch in 2005, did not file papers for a new term. Four other current board members are also absent from the list of nominees, according to a company filing on the Abu Dhabi Securities Exchange.

An Aldar spokesman declined comment.

Zain move may aid Etisalat bid - The National

Zain yesterday voted out a key board member who opposed selling the company to Etisalat, reviving the possibility of a US$12 billion (Dh44.07bn) buyout by the UAE telecommunications company.

As Zain shareholders yesterday approved a US$3.1bn dividend payout, two new board members were appointed, prompting speculation among analysts the Etisalat deal could be back on track.

Sheikh Khalifa Ali Al Sabah, a key shareholder in the company who was opposed to the Etisalat deal, was voted off the Zain board, a spokesman for the company confirmed. Sheikha Aida Salem Al Ali Al Sabah has also left the board, the spokesman said.

Surge in oil prices lifts Saudi Q2 business confidence - Arab News

Oil prices are likely to continue trading above $100 a barrel for the next six months, boding well for an upturn in the Saudi economy that would have knock-on benefits for sales and profits of businesses operating in the Kingdom. Yet regional political uncertainty appears to have upset the risk appetite of Saudi Arabia's business leaders, who have considerably altered their investment strategies to reduce their exposure to more volatile asset classes.

All 831 respondents to Banque Saudi Fransi's (BSF’s) second-quarter (Q2) business confidence survey expect oil prices to remain above $100 a barrel for the coming two quarters, including 76 percent supposing prices will stay above $110 a barrel. Higher oil prices and greater production have enhanced the overall expectation about the business community's growth prospects, with a majority of company executives surveyed charting out plans to increase production and hire new staff in the next six months as the vast majority count on a revival in bank lending.

Still, there has also been a shift in investment attitude coinciding with recent weakness in regional equity markets and political uncertainty afflicting several countries in the region. The survey indicated a move is taking place toward regarding low-risk investments in cash and bonds as more favorable than equity investments. A majority of respondents also expect inflation to rise in the coming period after the government handed out one-time bonuses to employees as part of a sweeping SR485 billion citizen support package unveiled in the first quarter.

Good prospects for Oman's Renaissance Services - The National

Renaissance Services of Oman offers a "unique" way for investors to profit from spending in the oil and gas sector, Deutsche Bank said in a note to investors yesterday.

The Middle East and North Africa (Mena) was likely to see one of the highest growth rates globally in upstream capital expenditure programmes, from which Renaissance stood to benefit, Deutsche Bank said. So-called capex programmes, or money spent on acquisitions and upgrades of equipment, property or industrial buildings, had been one of the more resilient in the Middle East, the bank said.

Shares in Renaissance, which provides services to the oil and gas sector, rose the most in more than three weeks as Deutsche Bank initiated coverage of the stock with a "buy" recommendation.

Saudi banks struggle with tepid loan growth Emerging Markets Report - MarketWatch

Some Saudi banks remain a tough call for investors after they reported first-quarter earnings, with profit margins under pressure and little growth in revenue from interest on loans, according to an analyst’s report Tuesday.

Credit Suisse’s Mohamad Hawa in London affirmed neutral ratings on Arab National Bank, Riyad Bank and Saudi Hollandi Bank.

He cut his target price on ANB to 35 riyals ($9.33) from 46 after the bank paid out a bonus issue of four shares for every 13 held.

WAM | Economic Zones World, NASDAQ Dubai to boost capital market access for Jafza companies

Economic Zones World and NASDAQ Dubai have entered into an agreement paving the way to provide equity financing opportunities for companies based in the free zone. The agreement supports the Dubai Government's strategic objective of promoting a favourable environment for the growth of international and regional companies and providing them convenient access to capital markets to fund their development.

Under the agreement both parties have agreed to identify companies based in Jafza that may benefit from carrying out an initial public offering (IPO) on the Dubai exchange. Jafza will work closely with NASDAQ Dubai to provide companies with information and support and jointly host workshops and training to support listing plans by suitable companies.

The collaboration is expected to boost Jafza's existing investment framework that provides clients with world-class facilities as well as innovative products and services, and now, a variety of options that provide them with access to funds. In addition to raising capital to finance growth, a company in Jafza can enhance and sustain its business standing by meeting the exchange's international listing standards. As part of efforts to create a holistic framework, Jafza also plans to explore new debt financing options and instruments for its clients. - How to jump-start an Arab economic miracle

Across the Arab world, revolts are toppling not just tyrants but economic systems. Tunisia, Egypt, probably Libya and Yemen, and possibly others will now have a chance to start with a clean slate, just as the former communist bloc did 20 years ago. So what should they do?

Though it may be tempting to introduce wholesale changes in policies and personnel, these new governments should use stability in business to underpin political change. Sudden moves in economic policy introduce uncertainty and disrupt long-term commercial relationships, discouraging investment and hampering exports. Shifting policies gradually and with forewarning – especially when these policies affect consumers directly, as in the case of subsidies for food or energy – minimises dislocations.

For example, when Luiz InĂ¡cio Lula da Silva, a trade unionist, became president of Brazil, he quieted market fears by signalling continuity in economic policy. In much the same way a country like Tunisia, which by some measures has better economic policies than several European Union nations, can ensure investment continues to flow by showing that these policies will be largely preserved. - Fresh suits filed in Saudi dispute

A multibillion-dollar dispute between two of Saudi Arabia’s largest family-owned conglomerates is set to intensify, with fresh suits filed or about to be filed in California and the Cayman Islands.

Saad Group, which is owned by Saudi billionaire Maan al-Sanea, and the Algosaibi family, one of the most prominent in the Gulf, have waged a legal battle across several continents since mid-2009, when it emerged that both were struggling to repay debts of more than $20bn.

Ahmad Hamad Algosaibi and Brothers has accused Mr Sanea of “massive fraud” that it claims could amount to much as $10bn, and has launched legal actions in the Cayman Islands, New York and London against the Saudi billionaire and Saad Group.