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Sunday, 28 February 2016

Rethink on Gulf bond sales as costs stay high | The National

Rethink on Gulf bond sales as costs stay high | The National:

"High pricing will deter regional companies and governments from selling bonds, despite facing a liquidity crunch, according to a top US money manager.

Franklin Templeton Investments expects issuers to seek out cheaper funding routes as governments grapple with rising deficits and companies seek funds for expansion or to repay old borrowings.

“If the bond market pricing remains elevated, we will see more local issuance, we will see more syndicated loans, maybe some multilateral-type funding. So I wouldn’t just take it for granted that budget deficits equals a tremendous increase in issuance,” said Mohieddine Kronfol, the chief investment officer for global sukuk and Mena fixed income at Franklin Templeton Investments."



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Bahrain does not deserve a rating downgrade | GulfNews.com

Bahrain does not deserve a rating downgrade | GulfNews.com:

"It can be argued that the credit rating agency Standard & Poor’s has been unfair with Bahrain by downgrading it two notches to BB. This translates into making fresh debt instruments issued by the government below the recommended investment level, and tantamount to junk bonds.

This is the worst ranking for any Gulf Cooperation Council (GCC) country. The same rating agency grants Abu Dhabi, Qatar and Kuwait with the AA.

The new rating forced Bahrain authorities to reconsider the offer to issue bonds worth $750 million. People familiar with the issue suggest that it was originally oversubscribed. Officials felt the need to reprice the offer at a higher interest rate."



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Economy Remains No. 1 Focus for Rouhani Emboldened by Iran Polls - Bloomberg Business

Economy Remains No. 1 Focus for Rouhani Emboldened by Iran Polls - Bloomberg Business:

"President Hassan Rouhani and his allies in Iran’s new parliament will set their sights on rebuilding the economy rather than risking the ire of hard-liners by advancing more liberal political and social change.
With economic recovery hinging on foreign investment, Rouhani’s government is seeking to pass laws that would attract international oil companies and make doing business in Iran easier for foreigners. A focus on loosening political and civil liberties would risk a backlash from rivals who control powerful conservative institutions. It may also face resistance from Rouhani’s boss: Supreme Leader Ali Khamenei."



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Moody's cuts Oman credit rating two notches before bond issue | Reuters

Moody's cuts Oman credit rating two notches before bond issue | Reuters:

"Moody's Investors Service sharply cut Oman's sovereign credit rating on Saturday, just weeks before the country may launch its first international bond issue in nearly 20 years, citing damage to state finances from low oil prices.

Moody's lowered Oman by two notches to A3 and kept the rating on review for a further downgrade, saying the country, a small exporter of crude, had fewer financial reserves than its rich neighbours to cope with an era of cheap oil.

"Oman has a comparatively weaker asset cushion, with government financial assets amounting to only about three years of spending," the ratings agency said."



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MIDEAST STOCKS-Oil prices buoy Gulf; Global Telecom aids Egypt | Reuters

MIDEAST STOCKS-Oil prices buoy Gulf; Global Telecom aids Egypt | Reuters:

"Major Middle East stock markets gained in active trade on Sunday after oil prices rose sharply last week. Egypt's bourse climbed on the back of Global Telecom , a favourite of foreign investors.

There is a sense that global bourses and oil prices are regaining some longer-term strength after Brent crude oil gained more than 6 percent last week. This is encouraging sharp rebounds in individual Gulf stocks that bore the brunt of panic selling early this year.

The Saudi index surged 1.9 percent to 6,092 points, testing technical resistance on the early February and end-January peaks of 6,056-6,099 points. Any break would turn it short-term bullish, triggering a right triangle formed by the highs and lows since mid-January and pointing up to around 6,850 points."



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GCC banking sector face further liquidity tightening | GulfNews.com

GCC banking sector face further liquidity tightening | GulfNews.com:

"Fiscal deficits across the GCC are seen widening further in 2016 despite fiscal reforms and spending retrenchment following the sharp decline in oil prices.

The growing fiscal gap is expected to be covered largely through domestic borrowing programme, which in effect will adversely impact banking sector liquidity across the region, according to a recent report from Abu Dhabi Commercial Bank (ADCB).

“Domestic funding will remain important for covering the GCC’s fiscal deficit in 2016, though a number of member countries have indicated a greater focus on external borrowing. These will include further drawdowns of government deposits in their banking sectors, as well as borrowing from banks,” said Monica Malik, Chief economist of ADCB."



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Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says - Bloomberg Business

Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says - Bloomberg Business:

"Gulf Cooperation Council countries may struggle to refinance $94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC Holdings Plc.
Oil-rich GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of $395 billion over the period, it said.
Expectations that these funding gaps "will be part financed through the sale of sovereign U.S. dollar debt will complicate efforts to refinance existing paper that matures over 2016 and 2017," Simon Williams, HSBC’s chief economist for the Middle East, said in the report. "With the Gulf acting as a single credit market, the refinancing challenge will likely be much more broadly felt" and "compounded by tightening regional liquidity, rising rates and recent downgrades," he said."



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MIDEAST STOCKS-Petchems lift Saudi, Global Telecom aids Egypt | Reuters

MIDEAST STOCKS-Petchems lift Saudi, Global Telecom aids Egypt | Reuters:

"Petrochemical stocks led Saudi Arabia's stock market higher in early trade on Sunday after oil prices rose sharply last week, while Egypt's bourse rose on the back of Global Telecom, a favourite of foreign investors.

The Saudi index gained 1.2 percent to 6,048 points in the first 45 minutes as Saudi Basic Industries and the petrochemical sector as a whole both surged 2.1 percent.

Alujain Corp, an industrial investment company focused on petrochemicals, jumped 5.7 percent despite reporting a 36 percent drop in last year's net profit."



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MIDEAST STOCKS-Gulf rises on bargain-hunting as global mood improves | Reuters

MIDEAST STOCKS-Gulf rises on bargain-hunting as global mood improves | Reuters:

"Stock markets in the United Arab Emirates and Qatar rose in early trade on Sunday as investors bought stocks that had been beaten down to multi-year lows this year.

There is a sense that global bourses and oil prices are regaining some longer-term strength after Brent crude oil gained more than 6 percent last week.

This is encouraging sharp rebounds in stocks that bore the brunt of panic selling early this year. One of the leading such stocks is Dubai construction firm Drake & Scull, which rose 6.3 percent to 0.44 dirham in early trade on Sunday. It was the market's most heavily traded stock."



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Ali al-Naimi, shepherd in the fields of black gold - FT.com

Ali al-Naimi, shepherd in the fields of black gold - FT.com:

"A
visit to Ali al-Naimi’s oak-panelled office in Riyadh is a journey through history. The world’s most powerful oil man is known to show guests the totems of his long career, from the rock formations that have blessed the kingdom, to pictures of the dignitaries he has met over two decades of diplomatic management of the forces of supply, demand, and speculation.
At 81, the diminutive Mr Naimi has seen it all; so much of it, in fact, that he is said to be ready for retirement. Instead he has found himself at the centre of one of the biggest, and perhaps most daunting struggles of his long tenure at the head of the Saudi oil ministry."



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