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Wednesday, 22 June 2011

The Gulf: magnanimous MSCI | beyondbrics –

MSCi Qatar & UAEInvestors had expected that MSCI, the index provider,would spurn the UAE and Qatar’s attempts to have their bourses bumped up from frontier to emerging market classification.

But they were pleasantly surprised at how softly MSCI let them down.

The index provider said in its announcement late Tuesday that it would review the markets’ status in December— pleasing investors who had expected the countries to be rejected this time and not reconsidered until MSCI’s annual review next year.

MENA stock markets close - June 22, 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)

Abu Dhabi's IPIC launches $1.5 bln bridge loan -sources

Abu Dhabi-owned International Petroleum Investment Co (IPIC) has launched a $1.5 billion bridge financing facility through RBS (RBS.L), JP Morgan (JPM.N) and Goldman Sachs (GS.N), two sources said on Wednesday.

The 18-month facility will initially carry a margin of 50 basis points over Libor, the two sources, both familiar with the matter, said, but will step up after 12 months, one of them added, declining to say what the new margin would be.

It is understood that a wider group of banks have been invited to participate in the deal, but one banking source said the margin was too tight to be attractive for the bank.

Oil Drops on U.S. Stockpiles, OPEC Output; Goldman Sees ‘Choppy’ Prices

Oil fell in New York before a U.S. government report today that may show that stockpiles of crude declined less than analysts forecast last week, raising skepticism about growth in the world’s biggest economy.

Futures declined as much as 1 percent after a separate industry report showed inventories fell 81,000 barrels. Analysts surveyed by Bloomberg News indicated the Energy Department will say supplies fell 1.83 million barrels. Federal Reserve Chairman Ben Bernanke will hold a press conference today following a meeting of the Federal Open Market Committee in Washington.

“Statements from Bernanke regarding the state of the U.S. economy after the FOMC meeting are likely to be a decisive factor for the crude oil market development today,” Filip Petersson, Stockholm-based commodity strategist at SEB AB said. “We expect a relatively bleak picture and no indications of further support efforts.”

Qatar exchange sees MSCI decision as positive

Qatar said Wednesday index provider MSCI Inc.'s MSCI +0.10% decision to delay upgrading the Gulf Arab state's financial market and that of the United Arab Emirates to emerging market status was positive, and vowed to press ahead with efforts to further develop the local bourse.

MSCI announced earlier Wednesday that it would carry out a review on whether to upgrade the U.A.E. and Qatar to emerging market status from frontier market because it needed more time to study whether the promotion was warranted. The review will also allow market participants to provide feedback on changes both countries have made recently to their bourses.

"Qatar Exchange views the decision as recognition of the positive steps taken by the exchange and the regulators in Qatar to meet the requirements of the MSCI and satisfy the needs of the international institutional investors," it said in statement on its website.

Qatar urges firms to lift foreign ownership limits

Qatar is in talks with individual firms to raise foreign ownership limits yet is not planning a blanket increase despite a requirement by index complier MSCI, a Doha bourse official told Reuters.

MSCI has extended a review on whether to upgrade Qatar and the UAE to emerging market status to December, warning Qatar's 25 percent foreign ownership limit would disqualify the gas exporter.

"We will continue to talk to individual companies to convince them to raise their limits and will continue discussions with the relevant ministries for an across-the-board raising," a Qatar Exchange official, who declined to be identified, told Reuters on Wednesday.

National Bank of Abu Dhabi plans 10 bln yen bond

National Bank of Abu Dhabi (NBAD), the UAE's largest lender by market value, is eyeing a 10 billion yen ($124.7 million) bond issue, an official said, in the first such issue from a Middle Eastern bank.

NBAD has mandated HSBC and Mitsubishi UFJ Morgan Stanley for its debut yen-denominated bond issue, IFR, a unit of Thomson Reuters, reported earlier on Wednesday, noting the earliest indicated pricing date as July 8.

"We are extending our liability profile and diversification is also key for us" Mahmoud al Aradi, general manager, financial markets group at NBAD told Reuters by phone.

Bahrain's ABC writes off 90 pct of $120 mln debt

Bahrain-based Arab Banking Corporation (ABC) agreed to write off 90 percent of the $120 million in debts owed to it by Kuwait's International Leasing & Investment Company , a Kuwaiti newspaper reported on Wednesday.

"The company will pay $12 million only to the bank which gave up $108 million," said Arabic daily al-Seyassha, adding that the company is currently negotiating the restructuring of its 60 million dinars ($218.6 million) debt to Kuwait & Middle East Financial Investment Co (KMEFIC).

The central bank has given the investment company a grace period until August 9 to settle its financial situation.

Saudi banking outlook stable Fitch

Fitch Ratings painted a stable outlook for the Saudi banking sector, indicating that it has limited expectations of changes in the banks Long-term Issuer Default Ratings (IDRs) in the near to medium term.

The IDRs of seven of the 10 Saudi banks rated by Fitch are driven by expected support, if needed, from the Saudi sovereign (AA-/Stable), the ratings agency said Tuesday.

Consequently, their outlooks mirror that of the sovereign and would only change should Fitch change its opinion on the propensity of sovereign support. The stable outlooks on the remaining banks, with IDRs driven by their standalone strength, reflect the institutions sound capitalization, improving asset quality and strong funding profiles.

Egypt's Citadel starts talks on possible buy-out

Egyptian private equity firm Citadel Capital said on Wednesday it was in possible buy-out talks with more than one potential strategic partner.

A source familiar with the matter said this month that Dubai-based Abraaj Capital had held talks with Citadel with a view to possibly buying a stake in the company.

Citadel did not name any suitors in its statement and said the talks were with more than one party.

Leighton's Dubai unit eyes Saudi deals

Dubai construction firm Al Habtoor Leighton, an affiliate of Australia's Leighton Holdings (LEI.AX), is eyeing two contract wins in Saudi Arabia worth up to 10 billion riyals each ($2.67 billion) by year end, its top executive said.

The firm also hopes to announce onshore projects in Iraq by the end of 2011 and will bid for work on Qatar's $36 billion railway and metro project as it aims to have 50 percent of its work outside the United Arab Emirates by the end of 2012.

"We would think that in the next 6 to 12 months there will be a couple of substantial orders (in Saudi)," Laurie Voyer, chief executive and managing director told the Reuters Real Estate and Infrastructure Summit in Dubai on Wednesday.

BP Plans To Build 300 Wells In Oman - CEO

U.K. energy giant BP PLC (BP.LN) aims to develop 300 natural gas wells in Oman in what would be one of the company's largest global projects, Chief Executive Bob Dudley said Wednesday.

"Today we have just the three wells (in Oman), the plan is to have 300," Dudleysaid. Developing tight gas resources in the Gulf State "will be one of the largest projects in BP's portfolio."

Bakrieland Says Dubai World Unit May Exit From Jakarta Real Estate Project

PT Bakrieland Development, Indonesia’s second-biggest property developer by assets, said its partner Dubai World may pull out of a real estate project in Jakarta and expects a decision within three months.

Limitless LLC, a property developer owned by Dubai World, agreed in September 2008 to invest in the project, valued at $1.7 billion at the time, and has delayed its investment following the global credit crisis, Bakrieland’s Chief Executive Officer Hiramsyah Sambudhy Thaib said. Limitless said it’s assessing its options for the venture.

“We’re trying to accelerate the progress again” after a delay in the development, Thaib said in an interview in Singapore yesterday. “We are now discussing the possibility of them pulling out of the deal. We are really hoping that we can move this project faster, after decisions are made.”

Nabucco chances grow as Europe’s atomic future dims

Until the Fukushima Dai-ichi nuclear power plant disaster in Japan, the Nabucco pipeline project was struggling with rising costs and political uncertainties. Now, as Europeans shun nuclear energy, EU plans to link the Caspian and Austria have gained new appeal

Challenged by cheaper rivals and lingering supply questions, the up-and-down Nabucco pipeline project may have a new lease on life following Germany’s decision to switch off nuclear power.

Nabucco’s backers in May said it would open two years later than planned and cost more than its target of 7.9 billion euros ($11.4 billion). The link aims to ease Europe’s reliance on Russian gas by delivering supplies through a new southern route.

MSCI delay shows UAE's progress- Nasdaq Dubai CEO

Index compiler MSCI's move to extend a review on whether to upgrade the UAE to emerging status shows the oil exporter's progress in developing its capital markets, the chief executive of Nasdaq Dubai bourse said.

MSCI has extended the review period for both the UAE and Qatar to December. It cited the May introduction of Deliver versus Payment (DvP) settlement systems as a key reason for this delay, which will give market participants more time to give their feedback. [ID:nN1E75K1W1]

"The UAE markets are evolving in the right direction," said Jeff Singer, chief executive of Nasdaq Dubai, one of three bourses in the UAE.

MSCI delay cans UAE bourse rally for six months, Qatari bid looks dead

The decision on a potential upgrading of the Abu Dhabi, Dubai and Doha bourses to emerging market status in the MSCI index has been delayed for six months to allow for the assessment of a new UAE settlement system, hastily introduced just in advance of the deadline.

But Qatar’s bid appears dead because the economy is too tightly owned by the state, with not more than 25 per cent of listed companies’ stock available for foreign ownership, compared with an upper limit of 49 per cent in the UAE.

Arab world will need to take care of itself

International financial institutions have spent hundreds of billions of dollars to avert disaster in the euro zone, but have pledged only a tiny fraction of that amount to help the economies convulsed by the Arab Spring.

Some economists believe the Middle East and North Africa are being told, politely but firmly, to take care of their own.

"The message is that the Arab world is enormously wealthy and should be capable of looking after itself. It's inevitable Europe will look after itself first, and the Middle East should do the same," says Simon Williams, the chief Middle East economist for HSBC.

Arabtec's stance on provisions disappoints

Arabtec's latest guidance on how it will provision against future delays in client payments has dampened enthusiasm among investors for the Dubai builder.

The emirate's largest construction company is owed more by clients than it posted in revenues last year.

At the end of the year, receivables stood at Dh5.7 billion. That is equivalent to more than a year of revenues, or 374 days of sales at the company.

Mubadala gets gas deal approval

Indonesia has given the green light for an Abu Dhabi Government-owned company to embark on a US$500 million (Dh1.83 billion) gas project.

Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, had been waiting for its South East Asian energy subsidiary, Pearl Energy, and two joint-venture partners to get the Indonesian government's go-ahead for the development of an offshore gas field.

Permission for the Ruby field marks a victory for Mubadala in a region it entered only three years ago.

DIFC courts revamp nears end

The Dubai International Financial Centre's court system is putting the final touches on the most comprehensive revamp of its rules since its founding six years ago.

The changes are a response to feedback from lawyers and regulators, and they include clarifications on how the courts deal with employment disputes, insolvencies and other issues. They go into effect on July 1.

"It has been about four years or so since the first rules were enacted, and it's not unusual for a court to be constantly fine-tuning its rules," said Michael Hwang, the chief justice of the Dubai International Financial Centre (DIFC) Courts. The DIFC courts include a small-claims tribunal, an arbitration centre, a trial court and a court of appeal.

Saudi Arabia Is Probably Producing More Oil, IEA’s Fyfe Says

Saudi Arabia, the world’s largest oil exporter, is probably boosting its output of the commodity, according to the International Energy Agency.

“There are indications that Saudi production is increasing,” David Fyfe, head of the IEA’s oil industry and markets division, told reporters in Washington today. “At the same time, it takes time for that oil to get to the market, and Saudi domestic crude utilization will probably also be increasing in June and July.”

The Paris-based agency, a policy adviser to 28 industrialized nations, including the U.S., Japan and Germany, is monitoring oil markets to determine whether members need to release reserves and cover the gap between commodity supply and demand, Fyfe said.

MSCI Delays Decision on Upgrading U.A.E., Qatar to Emerging-Market Status

MSCI Inc., whose stock indexes are tracked by investors with about $3 trillion in assets, delayed its decision until December on whether to raise the United Arab Emirates and Qatar to emerging-market status from its frontier classification.

South Korea and Taiwan failed to win the developed-market designation from MSCI, which currently considers them emerging markets, according to a statement yesterday. The two countries, Asia’s biggest developing economies after China and India, will be evaluated again for a shift in 2012.

Introduction of the so-called delivery-versus-payment, a program for completing stock
transactions, may help lift U.A.E. and Qatar from their frontier-market rankings. MSCI’s delay of the decision will allow more time for investors to assess the impact of the changes, the New York-based index provider said.