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Wednesday, 22 February 2017

Read the small print: Russian risks remain for the unwary

Read the small print: Russian risks remain for the unwary:

"As a list of investment risk factors go, the 30 pages of potential downsides that Russian steel group Severstal provided on a recent prospectus for a fundraising round worth up to $4.5bn was brutally honest.

The list included the standard legal jargon on the unpredictable potential of an easing of global growth, the cyclical nature of the steel industry and the threats posed by inclement weather. But the prospectus also included a series of warnings acutely specific to Russia that spelt out just what investors could expect from the country.

Warnings of potential state interference into industries, political pressure placed on companies, corrupt court proceedings, bribery, organised crime and the threat of tax investigations and imprisonment against executives jump out in a prospectus that itself warns that only “sophisticated investors who are familiar with and who fully appreciate the significance of the risks involved” should apply."



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Fitch Affirms 5 UAE Banks; Maintains RWP on FGB | Reuters

Fitch Affirms 5 UAE Banks; Maintains RWP on FGB | Reuters:

"Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of five UAE banks with Stable Outlook and maintained Rating Watch Positive (RWP) on First Gulf Bank's (FGB) IDRs. The agency also downgraded the Viability Rating of Union National Bank (UNB) to 'bbb-' from 'bbb'. A full list of rating actions is at the end of this commentary. KEY RATING DRIVERS IDRs, SUPPORT RATINGS AND SUPPORT RATING FLOORS The affirmation of National Bank of Abu Dhabi's (NBAD), Emirates NBD's (ENBD), UNB's and Abu Dhabi Commercial Bank's (ADCB) Long-Term IDRs, Support Ratings and Support Rating Floors (SRF) reflects the extremely high probability of support from the UAE authorities, and governments of Abu Dhabi (AA/Stable/F1+) and Dubai, if required. FGB's Long-Term IDRs of 'A+' also reflect the extremely high probability of support from the state. Fitch's view of support reflects the sovereign's strong capacity to support the banking system, sustained by UAE's sovereign wealth funds and on-going revenues from hydrocarbon production, despite lower oil prices, and the moderate size of the UAE banking sector in relation to the country's GDP. Fitch also expects high propensity from the authorities to support the banking sector, which has been demonstrated by the UAE authorities' long track record of supporting domestic banks, as well as close ties and part-government ownership links to a number of banks."



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Aramco golden ticket has risks for Western banks | Reuters

Aramco golden ticket has risks for Western banks | Reuters:

"JPMorgan and Morgan Stanley have been handed the keys to the kingdom. The U.S. investment banks are poised to lead the underwriting of Aramco's $100 billion share offering. The prized mandate has the potential to propel both to the top of investment banking league tables and unlock a stream of future work as Saudi Arabia reforms its economy and sells off its large inventory of state assets. An IPO flop, however, could be fatal for the banks' local franchises. The state-owned oil giant is assembling bankers ahead of the listing, which is scheduled for 2018. JPMorgan and Morgan Stanley look set to join boutique firm Moelis, which was appointed as an independent adviser earlier this month, and veteran banker Michael Klein, who has been working for months at Aramco's headquarters in Dhahran. HSBC could also be handed a mandate to help secure Chinese investors, Reuters reported on Wednesday. A leading role would be a big win for JPMorgan and Morgan Stanley, both of which rank outside the top five for fees earned on IPOs in the Middle East since 2010, according to Thomson Reuters data. The banks will have to share the stage with rivals as Aramco seeks to drum up support for what would be the world's largest-ever IPO. A bonanza is far from assured: competition to help with the restructuring of the Middle East's largest economy is fierce, and Riyadh has the upper hand in negotiations over fees. Nevertheless, a leading role on what is likely to be an intricate multi-exchange listing will help secure other more lucrative mandates as the reform plans of Deputy Crown Prince Mohammed bin Salman take shape. JPMorgan and HSBC had strengthened their credentials by arranging Saudi Arabia's $17.5 billion debut international bond offering last year, which was four times oversubscribed."



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MIDEAST STOCKS-Dubai's Arabtec surges, Saudi's Tasnee jumps after new deal | Reuters

MIDEAST STOCKS-Dubai's Arabtec surges, Saudi's Tasnee jumps after new deal | Reuters:

"Dubai's share index rose on Wednesday as builder Arabtec surged after getting approval from the securities regulator to increase its capital, while Saudi chemicals producer Tasnee gained on news it will sell a major business segment. Arabtec jumped by its 15 percent daily limit percent to 0.97 dirham, bouncing off its lowest closing level in five years on Tuesday. The builder said it received initial approval from the stock market regulator for its recapitalisation programme, subject to completion of its 2016 financial audit and a final sign-off."



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How Does Trump Election Impact Total SA's Iran Deal? - Bloomberg

How Does Trump Election Impact Total SA's Iran Deal? - Bloomberg:

"Total SA CEO Patrick Pouyanne weighs in on the impact of a President Trump administration on the company's Iran deal. He speaks with Bloomberg Editor-in-Chief John Micklethwait. (Source: Bloomberg)"



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Saudi Aramco Weighs Offering Citizens Discounted Shares - Bloomberg

Saudi Aramco Weighs Offering Citizens Discounted Shares - Bloomberg:

"Saudi Arabian Oil Co., gearing up for what may be the world’s biggest initial public offering, is considering discounted shares for local investors, according to people with knowledge of the matter.

The oil company has discussed ways to structure the offering in different tiers, allowing Saudi buyers to receive the stock at a lower price than international investors, the people said, asking not to be identified as the talks are private.

Shares in companies owned by the Saudi government have traditionally been offered to locals at a nominal value of about 10 riyals ($2.67) each -- usually far below their true worth. The stock market regulator last year approved new rules to price initial public offerings based on demand."



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Gazprom Neft profit jumps as production increases

Gazprom Neft profit jumps as production increases:

"Gazprom Neft, Russia’s fourth largest oil producer, reported net profit of 200bn roubles ($3.49bn) in 2016, up 82.5 per cent on 2016, on increased production and lower local costs. EBITDA in the fourth quarter of the year rose 8.2 per cent to 131bn roubles, beating forecasts by VTB Capital of $1.6bn, on higher than expected production. The company, owned by gas producer Gazprom, said production last year rose 8.2 per cent to 86.2m tonnes of oil equivalent, in a year that ended with promises from Russia to join an OPEC-led cut to global oil production."



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MIDEAST STOCKS-Arabtec rebounds on recap plan approval; Saudi's Tasnee jumps on asset sale | Reuters

MIDEAST STOCKS-Arabtec rebounds on recap plan approval; Saudi's Tasnee jumps on asset sale | Reuters:

"Dubai's share index rose on Wednesday after builder Arabtec rebounded sharply upon receiving approval from the securities regulator to boost its capital, while Saudi chemicals producer Tasnee jumped on news it will sell a major facility. Arabtec jumped 6.3 percent to 0.89 dirham, bouncing off its lowest closing level in five years on Tuesday. The builder said it received initial approval from the stock market regulator for its recapitalisation programme, subject to completion of its 2016 financial audit and a final sign-off. The construction company reported a wider fourth-quarter loss earlier this month and the board said it was seeking shareholder approval for a 1.5 billion dirham ($408.4 million) rights issue. "



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