#GCC and #MiddleEast Finance News: 27 Aug 2009

Thursday, 27 August 2009

Dubai Is Unlikely to Restructure Nakheel Bond, Ashmore Says

Dubai will choose to repay a government-guaranteed $3.52 billion bond sold by state-owned real-estate developer Nakheel PJSC rather than change its terms, according to Ashmore Investment Management Ltd.

Blackrock Global Funds and Ashmore are the two largest holders of the Nakheel issue, according to data compiled by Bloomberg. Ashmore Investment Management owns 1.09 percent of the bond, the data show. Ashmore, which started its first fund in 1992, invests in currencies, debt and special situations.

Rating firms have downgraded Dubai state-owned companies on concerns the emirate may not have sufficient funds to support its struggling entities. The credit crisis ended a four-year real-estate boom in Dubai and forced the United Arab Emirates government to bail out the two biggest mortgage lenders. The crisis wiped 50 percent off real-estate prices from their October peak, according to Deutsche Bank AG.

Al-Gosaibi plans to avoid liability -Mashreq

The UAE's Mashreq bank, which is suing the Al-Gosaibi family conglomerate in a New York court, said on Thursday that a counterclaim filed by the Saudi group is part of an attempt to avoid liabilities owed to many banks.

According to documents filed in New York on Wednesday, Ahmad Hamad Al-Gosaibi and Bros (AHAB) accused Mashreq of aiding and abetting fraud, conversion and breach of fiduciary duty, as well as unjust enrichment and bad faith.

Al-Gosaibi is seeking more than $1 billion from Mashreq, in a counterclaim to Mashreq's own $150 million lawsuit against the Saudi operation.

DP World denies stake sale talks

Port operator DP World has never been approached to sell a stake to a private equity firm and any decision would be up to the company's board, Chief Executive Mohammed Sharaf said on Thursday.

"There is no update ... we haven't been approached by anybody," he said in a conference call.

Parent company Dubai World said in May it was in talks to sell a stake in the port operator after it was approached by a regional private equity firm to sell a minority stake.

Well hush my blog, what did I find in the archives?

Sunday, May 10, 2009
DP World Sukuk Limited - Statement

In light of the suspension of trading in its shares, the Board of DP World has been informed by its ultimate majority shareholder Dubai World that Dubai World has received an approach from, and is engaged in discussions with a regional private equity firm which may or may not result in a transaction regarding a minority stake in DP World, coming largely from the free float.

Consequently shareholders of the company may wish to exercise caution in dealing in their shares.

-Ends-

© Press Release 2009

Dubai's DP World H1 profit falls 34 percent

Port operator DP World's first-half profit from continuing operations after tax fell 34percent to $188 million, the company said on Thursday, amid a decline in container volumes.

"The first six months of 2009 have continued to present a very challenging operating environment across the portfolio," the Dubai-based firm said in a filing on the Nasdaq Dubai.

DP World said it had 2008 first half profit of $287 million.

Iraq approves controversial Sinopec oil rights deal

Iraq has approved a deal that would see China's Sinopec Group acquire controversial oil rights in northern Iraq through its purchase of Swiss oil giant Addax Petroleum, Chinese media said Wednesday.

Iraq has now recognised Addax's development of the Taq Taq oilfield in its northern Kurdish region, after first threatening to blacklist Sinopec for pursuing rights there without consulting Baghdad, the China Business News reported, citing an unnamed Sinopec executive.

Sinopec, Asia's largest refiner, agreed to purchase Addax in June for 7.2 billion dollars in China's largest-ever overseas acquisition.

Moody's downgrades three Kuwait banks for weak credit

Moody's Investors Service yesterday downgraded three Kuwaiti banks, citing weakening credit conditions, as the Gulf state's banking sector grapples with the fallout from the financial crisis.

The three lenders are Gulf Bank of Kuwait, National Bank of Kuwait (NBK) and Burgan Bank.

Moody's said it had downgraded Gulf Bank of Kuwait due to pressure of large losses arising from derivative investments. The bank's financial strength rating (BFSR) was downgraded to D+ from C-. Consequently, Gulf Bank's long-term global local currency (GLC) and long-term foreign currency deposit ratings were also downgraded to A3/Prime-2 from A1/Prime-1, respectively. All ratings remain on review for further possible downgrade.

Saudi foreign assets cut by SR27bn in July

Saudi Arabia had cut its foreign assets by SR27 billion (Dh26.7bn) in July to fund its massive 2009 budget, official data showed yesterday.

The move was intended to mitigate the impact of the global financial turmoil and keep growth in its non-oil economy, it added.

The funds brought to about SR217bn the total assets withdrawn by the Saudi Arabian Monetary Agency (Sama) since the end of 2008 to bridge the gap between surging spending and relatively low oil revenue.

Qatar seeks gas pipeline to Turkey

Qatar has proposed a gas pipeline from the Gulf to Turkey in a sign the emirate is considering a further expansion of exports from the world’s biggest gasfield after it finishes an ambitious programme to more than double its capacity to produce liquefied natural gas (LNG).

“We are eager to have a gas pipeline from Qatar to Turkey,” Sheikh Hamad bin Khalifa Al Thani, the ruler of Qatar, said last week, following talks with the Turkish president Abdullah Gul and the prime minister Recep Tayyip Erdogan in the western Turkish resort town of Bodrum.

“We discussed this matter in the framework of co-operation in the field of energy. In this regard, a working group will be set up that will come up with concrete results in the shortest possible time,” he said, according to Turkey’s Anatolia news agency.

Gulf still waiting for US Fed chief to make right move

Let us now praise famous Ben, the Federal Reserve chairman who, in a nation where nearly one in 10 people is out of a job, has managed to keep his despite failing as banking tsar to prevent a financial crisis so severe that it plunged the US and the global economy into the worst recession since the Great Depression.

This week Barack Obama announced that he would reappoint Ben Bernanke, who was originally installed in 2006 by the US president’s predecessor and political rival, George W Bush, when Mr Bernanke’s term ends next January.

This might seem like a quintessential example of what some call “failing up”. Perhaps what it really underscores, though, is the tendency of investors, in this case the US government, to react to a losing trade by doubling down. Why, indeed, switch horses halfway through the race?

UAE rejigs interbank rate panel to spur lending

The United Arab Emirates central bank will set up a new panel for the interbank offered rate, an official said on Wednesday, in the hope that the change will lower the rates and spur lending.

The central bank expressed dismay earlier this month at persistently high interbank rates, saying they did not reflect the market. It announced a new mechanism to determine the rates, prompting speculation it may overhaul the panel of providers.

The new 11-bank panel will include four new local banks and drop two international lenders, and will get to work by mid-September, the official in the central bank's treasury department told Reuters, requesting anonymity.

Algosaibi seeks $2 bln in NY from Mashreq,al-Sanea

The Algosaibi family conglomerate has filed separate lawsuits in New York against Dubai-based Mashreqbank psc MASB.DU and Maan al-Sanea, the billionaire head of Saad Group [SAADG.UL], seeking combined damages of more than $2 billion.

Documents filed on Wednesday in a New York State court escalate a battle among several big Middle Eastern companies over alleged fraud.

Regulators and bankers are trying to address up to $22 billion of debt restructurings at Algosaibi and Saad, in what some Middle East experts view as the biggest financial shake-up in that region in the global credit crisis.

Sukuk attracts cash-rich banks

With debt markets gingerly reopening, Gulf companies eager to raise cash through issuing bonds have to make a decision: should they issue conventional or Islamic bonds, known as sukuk?

The SR7bn ($1.9bn) sukuk issued by Saudi Electricity Company, the kingdom’s state power utility, this summer could be a useful indicator.

Investors flocked to it, rewarding the company with a price of 160 basis points above the Saudi interbank offered rate.

KHI earnings plunge 83%

Kingdom Hotel Investments, in which Prince Al-Walid bin Talal, the Saudi investor, holds a 56 per cent stake, said on Wednesday first-half profit plunged 83 per cent to $4.2m. KHI, which is listed on the Nasdaq Dubai and London stock exchanges, blamed poor results at its Four Seasons hotels in Paris and Cairo and reduced real estate sales.

The profit excludes non-recurring items such as divestments and sales. Including divestments, profits fell 61 per cent to $8m from $20.6m in the same period last year, the company said in a statement.

Revenue dropped 11 per cent to $103.3m, but earnings before interest, tax, depreciation and amortisation, rose 9 per cent to $21.6m.

Manager made ‘hostage in Qatar’

Philippe Bogaert, a Belgian television producer, goes by the Twitter handle “Hostage in Qatar”.

Utilising social media and the internet, the father-of-two is trying to draw attention to a legal battle as he tries to leave the gas-rich emirate after a company he managed was declared insolvent last September.

Since December, Mr Bogaert has been stranded with limited funds at the Belgian embassy, a plight that he says is rooted in Qatar’s “medieval” sponsorship system, which generally allows local partners to block the exit of employees.

Nakheel cuts customers a deal

Billed as a development twice the size of Hong Kong Island, the billboard announcing Dubai’s mammoth Waterfront project now sags from its frame beside the Sheikh Zayed highway.

Waterfront and its parent company Nakheel are among the most high-profile victims of Dubai’s property crash. Local and international investors, bankers and real estate agents have been fretting how Nakheel, the property developer, will meet a series of loan payments due this year and next.

But now a mechanism has taken root allowing the Dubai government-owned company to unwind contracts in certain developments, such as Waterfront, that are unlikely to see the light of day.