A Mecca for high-rise projects

The world’s tallest clock tower, a hybrid of Big Ben and the Empire State Building, hovers above Muslim pilgrims as they walk around the Kaaba in Mecca, Islam’s most sacred site.

The Mecca Royal Clock Tower is the centrepiece of Abraj Al Bait, a $2bn complex of seven towers, being built by the Bin Laden Group on the site of a destroyed Ottoman fortress. The complex, due to be completed next year, features hotels, shopping malls and residential apartments to be managed by Fairmont, Raffles and Movenpick.

Saudi Arabia is capitalising on the world’s growing Muslim population by developing massive tracts in and around its holy sites and has identified religious tourism as a way of diversifying its economy.

Barclays Prefers Qatar Debt, Cautious on Dubai Bonds (Update1) - BusinessWeek

Qatar’s long-term bonds are the best bet for investors because the gas-rich state’s strong finances will likely contain any spillover from the euro debt crisis, Barclays Capital said.

“We see more upside potential for Qatar here and would recommend overweighting Qatar versus Abu Dhabi,” analysts Andreas Kolbe and Alia Moubayed said in a note sent by e-mail today. “We continue to see Qatar as the fundamentally strongest credit in the region and see value in the longer-dated bonds in particular.”

Qatar is the world’s largest producer of liquefied natural gas. The yield on Qatar’s 6.55 percent, fixed-rate bond maturing in 2019 has fallen 112 basis points to 4.643 percent this year, according to Bloomberg bond trader composite prices.

Gulf left waiting for IPO resurgence

Agricultural Bank of China’s planned $23bn-plus initial public offering is being helped by multi-billion-dollar commitments from Qatar and Kuwait’s sovereign wealth funds, but share sales in the Gulf are facing a far more torrid time.

An IPO renaissance in the Gulf has long been said to be imminent. Last month Sameer al-Ansari, head of Shuaa Capital, said the investment bank was aiming to manage a Dh1bn ($272m) share offering in Abu Dhabi early this summer, and predicted that it could reopen the regional IPO market.

However, so far facts have failed to support bullish rhetoric – particularly as the region grapples with the economic downturn. Gulf companies managed to raise only $1.9bn last year, down from $11.7bn in 2008, says Zawya, a regional data provider, and the lull has continued into this year.

UPDATE 1-Logistics firm Agility is a fugitive-US prosecutor | Reuters

U.S. prosecutors said Kuwait logistics company Agility (AGLT.KW) is a fugitive from justice that has defrauded the U.S. military and does not deserve the right to bring a motion in federal court.

The prosecutors asked a federal court in Atlanta not even to consider the pretrial motion the company brought in April to dismiss the case against it on the grounds that it was not served in the correct legal manner.

The company accused prosecutors of substituting "rhetoric for legal analysis" in its own statement and described as "excellent" its performance on behalf of the U.S. government over the contracts.

Saudi, Oman Shares Drop as Global Markets Fall; Dubai Advances - BusinessWeek

Saudi Arabia and Oman shares retreated for a second day as an unexpected decline in U.S. home sales raised concern about the stability of the global economic recovery. Deyaar Development PJSC pushed Dubai stocks higher.

The Tadawul All Share Index dropped 0.3 percent to 6,343.47, the lowest level in more than a week, as Samba Financial Group, the country’s second largest bank, fell. Bank Muscat SAOG, Oman’s biggest bank by assets, retreated the most in almost three weeks, pushing the country’s MSM30 Index down 0.6 percent. The Bloomberg GCC 200 Index slid 0.3 percent.

“Correlation is running high with what’s happening globally,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. “Investors are trying to reduce risk ahead of a long summer.”

Bahrain Mumtalakat Completes $750M Bond Debut; Offers Top $3B - WSJ.com

Bahrain Mumtalakat Holding Co., a sovereign wealth entity owned by the Kingdom of Bahrain, has priced its debut bond issuance--raising $750 million--with a spread of 300 basis points over midswaps, in line with price guidance.

The lead underwriters on the sale were Deutsche Bank, HSBC, J.P. Morgan and Standard Chartered, and orders were in the range of $3.1 billion by Wednesday, according to a source familiar with the sale.

Proceeds will be used for general corporate purposes, including to refinance existing indebtedness. Terms were as follows:

Amount: $750 million Maturity: June 30, 2015 Coupon: 5.5% Issue Price: 99.077 Yield: 5.212% Spread: 300 basis points over Midswaps Covenants: Change of control put at par Ratings: A (Standard & Poor's) A (Fitch Ratings)
Mumtalakat's assets are in domestic real estate, telecommunications, aviation, banking and manufacturing. Bahrain owns a separate holding company for oil and gas assets, the National Oil and Gas Authority.

Saudi Dar Swaps $225 Million of Debt to Floating Rate - BusinessWeek

Dar Al Arkan Real Estate Development Co., Saudi Arabia’s biggest property company by market value, exchanged half of its $450 million fixed-rate Islamic bond as it seeks to cut borrowing costs.

The company swapped $225 million into floating-rate notes, reducing the profit it pays on the five-year sukuk to 7.95 percent more than the three-month Saudi interbank offered rate, according to a statement to the Dubai bourse today. The notes paid a coupon of 10.75 percent when they were sold in February.

“This transaction comes in line with the company’s strategy to reduce its cost of financing by benefiting from the current available lower variable rates,” the company said.

Citadel Resources May Boost Stake in Saudi Project, CEO Says - BusinessWeek

Citadel Resources Ltd., developer of Saudi Arabia’s biggest copper deposit, said it’s interested in the future in boosting its stake in the Jabal Sayid deposit beyond 70 percent.

”It’s a great project, so if we can do it as an accretive deal we would obviously do so,” Ines Scotland, chief executive officer of Melbourne-based Citadel, said today in an interview, adding the company had no immediate plans to boost its stake. “We’re constantly chatting with our joint venture partners about that, about the right point in time.”

Citadel plans to start production at the A$280 million ($244 million) copper-gold development by the fourth quarter next year. The company said today it sold A$251 million shares to institutional investors to help fund the project.

Is there a glimpse of the future in Aabar’s decision?

Aabar Investments’s proposal to consider delisting its shares to go private surprised market analysts on Monday, but it is part of a growing trend away from the traditional public limited company model, especially in the fast-growing economies of Asia and the Middle East.

It is too early to call the death of the “plc” conclusively. The tried and trusted methods of corporate organisation may remain the preferred form in Europe and the US for many years. But whether they will still be appropriate for Chinese or Indian or Gulf corporations in the future is increasingly open to debate.

If Aabar’s plan comes off – it is still just under consideration – it will be a significant straw in the wind.

Beyond An Oil-Based Economy - Forbes.com

Tim Ferguson: Like others in the Gulf, you're trying to position your economy for a future in which energy resources are not so much the central element of the wealth production in the Gulf. You call your program Economic Vision 2030. What's the essence of that?

Shaikh Mohammed Bin Essa Al-Khalifa: Well, the vision is to transform Bahrain's economy from an economy based on oil wealth to an economy that is globally competitive, sustainable and provides a higher standard of living for the people of Bahrain.

Ferguson: The distinction of Bahrain in the Gulf, one distinction, is that it's considered the freest economy in the Middle East and has a history of that. Could you explain that a bit?

Al-Khalifa: Well, absolutely. What many people don't realize is Bahrain has been a trading nation for 4,000 years. And because we have been a trading nation and relied on global trade, you know, we are, what I would like to say, one of the first participants in globalization. As a small country, we have benefited from it. So we've always treated people who come to Bahrain from the outside with open arms. For example, in Bahrain, we treat an investor equally, whether he comes from the U.S., Europe or Bahrain. Investment is investment. And it is this philosophy that is ingrained across all we do in Bahrain, because it doesn't matter in essence where the money comes from.

Emirates Growth Splurge Rattles Long-Haul Rivals - Bloomberg

Emirates, the biggest international airline, is rattling rivals in Europe and Asia with a growth splurge that may be as game-changing for long-haul carriers as the expansion of Ryanair Holdings Plc and Southwest Airlines Co.

The 25-year-old company is building up a fleet of 90 Airbus SAS A380 aircraft with 45,000 seats and operating costs the manufacturer says are 12 percent lower than Boeing Co.’s latest 747. That poses a threat to European carriers that specialize in the same long-distance transfer traffic, British Airways Plc Chief Executive Office Willie Walsh said in an interview.

Emirates’ latest order for 32 A380s worth $11 billion, announced this month, will give it 70 more superjumbos than any other airline, funneling price-sensitive passengers through its Dubai hub in a challenge to network carriers including Deutsche Lufthansa AG, Air France-KLM Group and Singapore Airlines Ltd. Competitors say the company is benefiting from government ownership and that they can’t compete with its purchasing power.

What’s going on in Kuwait Finance House?

Kuwait Finance House (M) Bhd (KFH) has been under the radar quite a bit, recently.

Last week, it discontinued the rating services by RAM Ratings Sdn Bhd.

Last month, its chief executive officer Jamelah Jamaluddin, who was appointed in February, had requested several of its staff to go on leave pending internal investigations into transactions and contractual arrangements undertaken over the years.

Dubai's Sheikh Mohammed: It's not a recession, it's a challenge - CNN.com

The worst is over and Dubai is looking for new opportunities for growth, according to Dubai's ruler, Sheikh Mohammed.

In an exclusive interview with CNN, Sheikh Mohammed Bin Rashid Al Maktoum said that he views the global recession as a challenge and that companies there are restructuring in response.

"I don't call it a recession, I call it challenge," said Sheikh Mohammed, who is also prime minister of the United Arab Emirates. "The companies are restructuring because it's a new world. You have to stop and restructure."