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Thursday, 2 June 2011

Bad loans in UAE increase again - The National

Non-performing loans in the banking system rose for the eighth month in a row in April as Central Bank officials forecast a further increase in bad debt in the second half of the year.`

Exposure to an oversupply of units in the property market was a main reason for the rise in non-performing loans (NPLs), said Saeed al Hamiz, the senior executive director of banking supervision and examination at the Central Bank.

"Usually when you have a global financial crisis it's natural for [NPLs] to go up as the ability for people to pay is affected," he said yesterday.

Jordan Dubai Capital announces sale of its stake in Jordan's Central Electricity Generating Company |

Jordan Dubai Capital (JD Capital), an investment company based in Amman, whose largest shareholders are Dubai International Capital and the Social Security Corporation of Jordan, today announced the sale of its controlling stake in the Central Electricity Generating Company (CEGCO), the largest power generator in Jordan to ACWA Power International (ACWA Power), a major Saudi Arabian developer, owner and operator of privately financed bulk water desalination and power generation projects for a total consideration that values 51% of CEGCO at $144m.

CEGCO is the largest power generator in Jordan with seven power generation sites across the country totalling circa 1700MW of installed capacity from a mixed portfolio by technology and fuel type. CEGCO was privatized in 2007 when 51% of CEGCO was acquired by Energy Arabia (ENARA), which was established in 2006 by Jordan Dubai Energy & Infrastructure - a wholly owned subsidiary of JD Capital - in partnership with Malakoff and Consolidated Contractors Company (CCC) to meet the growing demand for power generation investment and services in the region. The other shareholders in CEGCO are the Government of Jordan which maintained a 40% stake after the privatization and the Social Security Corporation which acquired 9% from the Government.

Commenting on the sale David Smoot, Chairman of Jordan Dubai Capital said, "After four years, JD Capital has come to the end of its natural hold period for an asset of this type. JD Capital will continue to concentrate on the development of its portfolio as well as look for future growth areas in Jordan in which to invest based on our belief that Jordan remains an attractive destination for regional and international investment."

MENA stock markets close - June 2, 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)

Billionaire Sawiris Leads Egypt Businessmen Back to Politics After Revolt - Bloomberg

Egyptian billionaire Naguib Sawiris is leading businessmen back into politics after the revolt that toppled President Hosni Mubarak also brought the downfall of several wealthy entrepreneurs.

The head of mobile-phone network Orascom Telecom Holding SAE (ORTE), Egypt’s third-biggest listed company, is blunt about his aims. His newly founded Free Egyptians Party will promote capitalism, “attract honest businessmen who create jobs” and challenge the Muslim Brotherhood, the frontrunner in September’s election, Sawiris said at a May 14 public debate in Cairo.

“We don’t agree that the word businessmen should be an insult,” said Sawiris, who’s worth $3.5 billion according to Forbes magazine.

Gas Exporters’ Forum in Cairo Marked by Qatari Absence, Libyan Arrival - Bloomberg

The opening of the 12th Gas Exporting Countries’ Forum in Cairo was marked by the absence of officials from Qatar, where the group has its headquarters, in a possible sign of their displeasure over Libya’s attendance.

Qatar’s energy minister, Mohammed Saleh al Sada, was due to attend the meeting today and address a news conference this afternoon. As of 12:30 p.m. in Cairo, no Qatari delegation had arrived. It was unclear if Qatar would attend later in the day.

Forum representatives refused to say if Qatar was boycotting the meeting due to the presence of an official from the government of Libyan leader Muammar Qaddafi. Qatar supports Libyan rebels fighting forces loyal to Qaddafi.

Dubai Default Risk Drops to Lowest Since 2009 - Bloomberg

Dubai’s default risk fell to the lowest level since Dubai World roiled global markets with a debt restructuring in 2009, as Emirates airline sold bonds and local entities reach debt accords.

The cost of protecting Dubai’s debt against default dropped to 322 basis points today, according to data provider CMA at 10:30 a.m. in London. The five-year credit default swaps surged from 325 basis points on Nov. 24, 2009 to 655 three days later after Dubai World announced plans to restructure about $25 billion of debt.

Emirates, the world’s biggest airline by international traffic, sold $1 billion of five-year bonds yesterday, yielding 330 basis points over the benchmark mid-swap rate. State-owned Dubai World reached a final agreement with its lenders in March, while Dubai Holding LLC and property developer Nakheel PJSC are in talks with creditors to restructure a total of about $20 billion.

Fitch assigns Abu Dhabi Commercial Bank A+, outlook stable | Alrroya

Fitch Ratings has assigned Abu Dhabi Commercial Bank (ADCB) a Long-term foreign currency Issuer Default Rating (IDR) of 'A+' with a Stable Outlook, Short-term IDR of 'F1', Individual Rating of 'C/D', and Support Rating Floor of 'A+'. Fitch has also affirmed the Support Rating of '1'.

ADCB's Long- and Short-term IDRs and Support Rating reflect the extremely high probability of support from the UAE authorities if needed. Fitch's opinion of likely support is based on the Abu Dhabi government's 58.1% stake (through the Abu Dhabi Investment Council) in the bank, its systemic importance and the strong history of support from the UAE authorities for local banks.

The Individual Rating reflects ADCB's strong commercial franchise and improving core earnings. The rating is constrained by the bank's weak asset quality, its vulnerability to high concentration risks in loans and deposits as well as its tight capital and liquidity position.

Analysts' View: OPEC considers hike in oil output target | Reuters

OPEC is considering raising its target for crude oil supply by as much as 1.5 million barrels per day (bpd), a delegate to next week's meeting of the group told Reuters on Thursday.

The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, is due to meet in Vienna on June 8 to discuss output and its response to a sharp rise in oil prices that could be a drag on economic growth.

The 11 members of OPEC bound by the group's targets pumped 26.23 million bpd in May, nearly 1.4 million bpd above their target of 24.84 million bpd, a Reuters survey showed.

Analysis: Saudi rulers aid allies against Iran, Arab revolts | Reuters

Top oil exporter Saudi Arabia is using its political clout and financial power to draw regional allies into a united front against perceived threats from Iran and popular discontent with Arab autocrats.

Saudi rulers, alarmed by shifts in U.S. policy in response to the toppling of long-time ally Egyptian President Hosni Mubarak and protests roiling Bahrain, Oman and Yemen in the kingdom's own Gulf backyard, are vigorously pushing back.

"Saudi Arabia is using its excess budget wealth to silence the revolutions or shape their outcomes," said London-based Saudi researcher and author Madawi al-Rasheed.

Islamic trusts could revive Gulf property market - Maktoob News

Jordanian Ashraf Hamdan began investing in Dubai's real estate market in 2006, with a few modest rental investment forays before turning his sights on flashier projects as a wave of luxury developments hit the market.

The real estate bust in 2008 left investors like Hamdan with half-finished projects sitting in the desert sun and losses that were unlikely to be recouped.

"It was a costly learning experience for a real estate investor," said the 53-year-old businessman. "But real estate is in our blood here in the Arab world. It's a tangible investment, and from an Islamic perspective, that appeals to me.

MENA Bonds: May Dismay - Zawya

The prospect of economic stagnation hovering on the horizon in the second quarter took its toll on the MENA bonds market, writes Joey Geadah, Research Associate at Zawya.

The Middle East and North Africa bonds firmament was somnolent as economic stagnation imposed its shadow on the region in the second quarter. Regulatory initiatives were the most recordable stats during May, while bond announcements and issuance were minimal.

Some nations, such as Oman and Saudi Arabia, called time out in May; others, such as Syria, pushed through the uproar and bond debutant Palestine made a momentous appearance.

SABIC Capital seeks loan |

SABIC Capital, affiliated to petrochemicals giant Saudi Arabia Basic Industries Corporation (SABIC), has mandated five banks to arrange a $2 billion, five-year loan, banking sources said Wednesday.

The five coordinators are Bank of Tokyo-Mitsubishi UFJ, Citi, SMBC, ING and Mizuho, one of the sources said.

The financing is expected to carry a sub-50 basis points (bps) over LIBOR margin and an all-in spread of less than 100 bps, sources previously told Thomson Reuters Loan Pricing Corporation.

Banks have liquidity management problem: Suwaidi - Emirates 24/7

Banks in the UAE have sufficient financial resources but are unable to properly utilize these funds in the absence of a domestic bond market, the central bank governor was quoted on Thursday as saying.

Sultan bin Nassir al Suwaidi also said there was a need to review laws in the financial sector following the 2008 global fiscal distress, adding that a new law on high-quality assets is being developed by the central bank.

Quoted by local newspapers, Suwaidi said banks had no problem enforcing Basel 3 regulations on capital adequacy on the grounds they enjoy a strong financial position and their adequacy is already good.

The bank saga - Oman

With a record budget spending in 2011, the government is pursuing its investment focus on infrastructure projects. At 4.4 per cent, the estimated Omani GDP growth is higher than that of many developed and emerging economies.

The high GDP growth comes in the backdrop of a very low rate of forecasted inflation, which is conducive for banking sector growth. The government has envisaged a planned spending of RO4.28bn for various infrastructure projects in 2011-15.

As high government spending continues, the government sector would remain the principal source of credit demand over the short-term. The government spending is expected to trickle down to the private sector from early 2012.

Gulf approach to U.S. govt debt unchanged -UAE c.banker - Maktoob News

Gulf Arab central banks still regard U.S. Treasuries as a safe investment and the United Arab Emirates may consider diversifying reserves to include China's yuan, the UAE central bank governor said on Wednesday.

Gulf states, which mostly peg their currencies to the U.S. dollar, are major holders of Treasuries and other U.S. assets, with oil -- priced in dollars -- their major source of revenue. Asked whether the UAE was considering changing its policy on buying U.S. government bonds after a bill to increase the United States' debt issuance limit was defeated in Congress on Tuesday, Sultan Nasser al-Suweidi said: "No, there is no change."

"For the time being, I do not think there is a strong move in GCC (Gulf Cooperation Council) countries following Asian central bank investment policies," Suweidi told reporters on the sidelines of a financial workshop in the UAE capital.

Dubai restructuring impact 'manageable' for banks: S&P | Alrroya

Ratings agency Standard & Poor's believes the impact of ongoing Dubai restructurings on local banks it rates is "manageable", analysts at the company said on Wednesday.

Banks in the United Arab Emirates are understood to be exposed to heavily indebted state-linked entities, several of which are in discussions with lenders to restructure loans.

"The impact (of the restructuring) will be higher on non-rated banks. The exposure of rated banks to the recent restructurings is somewhat manageable compared to the non-rated banks," said Goeksenin Karagoez, credit analyst at S&P, on a conference call.

gulfnews : Scrutinise past mistakes for future lessons

It is not just ordinary citizens and investors who still have questions about how they lost their savings and investments so quickly during the financial crisis — fund managers, financial institutions and sovereign funds too remain perplexed as to how their world collapsed so fast.

Plenty of books, research reports and articles have tried to provide answers — some more successfully than others — but I believe some of the most convincing analysis came recently in the documentary Inside Job, which explored some of the manipulations of derivatives and errors in judgment made by those within global financial institutions.

One of the most shocking aspects of the years leading up to the financial crisis, and one illustrated by Inside Job, was the enormous political influence that heads of finance houses, eminent technocrats and professors of prestigious universities have had in supporting the economic policy of the West for decades. Even, as we now know, when these policies were fatally flawed.

gulfnews : Emirates closes $1b bond issue

Emirates on Wednesday announced the successful close of its US dollar "Reg S" bond issue at $1 billion.

The unrated issue will carry a coupon of 5.125 per cent per annum fixed, payable semi-annually. It will have a five-year maturity and will be listed on the London Stock Exchange.

"This issue from Emirates has received an overwhelmingly positive response from a wide range of investors, which is indicative of our financial strength. This also shows a high level of confidence in our successful business model and growth plans," said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group. Emirates was able to achieve attractive pricing from a wide geographical spread of investors.

Gulf lenders on the up but questions remain for S&P - The National

Banks in the Gulf are recovering from a turbulent start to the year, but question marks remain for lenders in the UAE, Bahrain and Kuwait, according to a report from Standard and Poor's.

"We believe the financial profiles of most of the GCC banks we rate will remain relatively stable or keep improving, but slowly because of sluggish loan growth and difficult funding conditions," the credit ratings agency said in the report.

It was hoped banks' troubles in the UAE would have eased after a recent string of improved profits, although the recent rescue of Dubai Bank by the emirate's Government had served as a reminder of the difficult conditions for lenders.

China must ease controls before the UAE can consider buying assets - The National

China needs to ease capital controls before the UAE can consider buying the Asian powerhouse's assets, says the Central Bank Governor.

If rules were relaxed, the treasury department of the UAE Central Bank would decide on whether to buy yuan-denominated assets, Sultan al Suwaidi said.

"It depends on the Chinese themselves because they are not yet prepared to allow the yuan to be a reserve currency, so they have tremendous controls," he said yesterday.

Bahrain set to spend Dh60bn on rebuilding economy over two years - The National

Bahrain's government yesterday said it would spend 6.2 billion Bahraini dinars (Dh60.4bn) rebuilding its economy over the next two years as King Hamad bin Isa Al Khalifa lifted the state of emergency a fortnight earlier than planned.

The developments were greeted by business leaders as a sign the kingdom was keen to rebuild its damaged business hub after months of economic instability.

"Actions speak louder than words," said the managing director of an international bank with a presence in Bahrain who did not want to be named. "Clearly they are in the right direction but time will tell."

ICD studies all options to close funding gap - The National

Dubai's biggest debt-raising operation to emerge since the Dubai World financial crisis has just been launched ahead of a September deadline to pay back a US$3.75 billion (Dh13.77bn) loan in three months.

But as the deadline nears, the efforts - believed to have been successful - of the Investment Corporation of Dubai (ICD) to raise $2.8bn in new bank finance has stirred questions in the banking world on how the Government's investment arm plans to repay the rest.

The corporation is the third pillar of what is known informally as Dubai Inc and is the holder of the so-called "good assets", but questions have arisen on what options ICD has on managing its debt finances before and beyond the due date.

Egypt Tax Levies May Trigger Stock Drop After 10% Rally, EFG-Hermes Says - Bloomberg

Egypt’s benchmark stock index, the world’s third-best performer in May, may fall after the government unveiled a capital gains tax on dividends and higher corporate tax bracket to rein in the budget deficit, EFG-Hermes Holding SAE said.

“The immediate reaction of the stock market to any tax increase is in most cases negative because investors assume a decline in profitability,” said Wael Ziada, the head of research at Cairo-based investment bank EFG-Hermes. “The market should see a mild decline as it seeks more clarity about how the tax will be applied.”

The North African country will levy a 10 percent capital gains tax starting next fiscal year on dividend payments, mergers and acquisitions and asset revaluations, Minister of Finance Samir Radwan said yesterday. The government also plans to raise taxes for companies with profits of 10 million Egyptian pounds ($1.7 million) or more per year to 25 percent from 20 percent.

DP World makes quiet London debut - The National

DP World's debut on the London Stock Exchange yesterday failed to excite investors, but the potential for the company's majority owner to sell more shares gained traction among market players.

Investors and market analysts downplayed the company's first day of trading but looked to its biggest shareholder, Dubai World, as a signal of DP World's future trading activity.

Dubai World owns 80 per cent of DP World and revealed in the port operator's prospectus published before the London listing that it would consider selling a portion of its stake to repay debt due by the end of this year. - Doubts raised over post-revolution aid

Members of the G8 group of leading industrial nations last week pledged at their summit in France more than $20bn in a combination of debt relief and aid to Tunisia and Egypt.

Qatar had previously pledged $10bn in the form of unspecified “investments” in Egypt while Saudi Arabia had promised $4bn, including a deposit at the Egyptian central bank and bond purchases.

Scepticism abounds, however, about whether the pledges are either sufficient or structured to deal with the two countries’ pressing financing needs.