MIDEAST STOCKS-Saudi surges before MSCI decision, UAE's Tabreed soars on Engie buy | Reuters:
"Saudi Arabia's stock market surged on Monday after a regulatory official was quoted as predicting the bourse would enter MSCI's emerging market index sooner than most investors had expected, while the rest of the region was subdued. Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by the Asharq al-Awsat newspaper that he expected the Saudi market to be included in the index by the end of 2018. MSCI will announce late on Tuesday whether it is putting Saudi Arabia on a list for possible index inclusion. Most funds think Riyadh has done enough to be included, but if MSCI follows its usual timetable, actual entry would occur in mid-2019. However, MSCI has the flexibility to move faster if it wishes."
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Monday 19 June 2017
OPEC Deal In Jeopardy As Libyan Oil Output Nears 1 Million Bpd | OilPrice.com
OPEC Deal In Jeopardy As Libyan Oil Output Nears 1 Million Bpd | OilPrice.com:
"Libya—whose production has been hampered by civil unrest, political divides, and oil export terminals blockades over the past few years—is now targeting to further increase its oil output. Its most immediate goal is to reach 1 million bpd of production by the end of July, which would further complicate OPEC’s desperate efforts to reduce global inventories and prop up oil prices. And its ambitions seem plausible. Just last month, when OPEC was discussing rolling over the output reduction deal, production-cut-exempt Libya hit its highest daily production level since 2014. Earlier this week, OPEC reported that total cartel production in May was actually higher than in April, with Libya the biggest single contributor to that increase. Analysts warn, however, that Libya’s output increase is not a for-sure thing. Production could sharply drop again, given the political rivalry between factions and the fragile security situation in country. "
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"Libya—whose production has been hampered by civil unrest, political divides, and oil export terminals blockades over the past few years—is now targeting to further increase its oil output. Its most immediate goal is to reach 1 million bpd of production by the end of July, which would further complicate OPEC’s desperate efforts to reduce global inventories and prop up oil prices. And its ambitions seem plausible. Just last month, when OPEC was discussing rolling over the output reduction deal, production-cut-exempt Libya hit its highest daily production level since 2014. Earlier this week, OPEC reported that total cartel production in May was actually higher than in April, with Libya the biggest single contributor to that increase. Analysts warn, however, that Libya’s output increase is not a for-sure thing. Production could sharply drop again, given the political rivalry between factions and the fragile security situation in country. "
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The Qatar crisis has global implications
For the past six years, there have been two Arab worlds. The world of violence and tragedy; and the world of glitz and globalisation. Syria, Iraq, Libya and, to a lesser extent, Egypt — have been engulfed by conflict. But Qatar, Abu Dhabi and Dubai have prospered as global hubs for travel, leisure, business and finance. The booming Gulf metropolises seemed untouched by the violence in the rest of the Middle East. They even profited indirectly, as safe havens in a region in turmoil.
But the wall between the two Arab worlds is breaking down. Saudi Arabia, Bahrain, Egypt and the United Arab Emirates (which includes Abu Dhabi and Dubai) have imposed a blockade on Qatar — claiming that the Qataris have been supporting jihadi movements across the region, and particularly in Syria and Libya. As a result, the illusion that the wealthy Gulf could remain uncontaminated by the wider conflicts in the Middle East has been shattered.
The obvious question is whether the dazzling rise of the Gulf states could be followed by an equally dazzling fall. If that were to happen, the implications would be global.
Saudi Aramco cleans up financials to bolster valuation
Saudi Aramco cleans up financials to bolster valuation:
"Saudi Arabia is seeking to present investors with a pristine set of financials for its state energy giant as the kingdom targets a $2tn valuation ahead of its planned initial public offering in 2018.
The country’s highest authorities are working with Saudi Aramco and its IPO advisers to untangle its finances from those of the state. This involves shifting certain liabilities from the company's accounts to that of the government.
A series of legal instructions from the kingdom’s cabinet — resolutions from the Council of Ministers — have been issued in recent months but not made public, say four people briefed on the matter."
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"Saudi Arabia is seeking to present investors with a pristine set of financials for its state energy giant as the kingdom targets a $2tn valuation ahead of its planned initial public offering in 2018.
The country’s highest authorities are working with Saudi Aramco and its IPO advisers to untangle its finances from those of the state. This involves shifting certain liabilities from the company's accounts to that of the government.
A series of legal instructions from the kingdom’s cabinet — resolutions from the Council of Ministers — have been issued in recent months but not made public, say four people briefed on the matter."
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Saudi Aramco strives to curb its state role before IPO
Saudi Aramco strives to curb its state role before IPO:
"More than 60,000 fans packed into Saudi Arabia’s Shining Jewel sports arena at its opening ceremony in May 2014, before the final of the country’s main football tournament. The inauguration featured a stunning fireworks display in honour of the late King Abdullah bin Abdulaziz Al Saud, who had commissioned the stadium in Jeddah to showcase Saudi’s place as a leading Arab nation. The arena was built swiftly and to a high quality. But the work was not managed by a specialist contractor — it was the endeavour of the state-owned energy behemoth Saudi Aramco. Amin Nasser, chief executive, said on accepting an award for architectural excellence last year that the company “continues to support the progress of the nation”. Projects such as the Shining Jewel reflect how Saudi Aramco’s role stretches far beyond its status as the world’s largest oil company and the source of 70 per cent of the Saudi government’s revenue. Saudi Aramco has been responsible for a significant chunk of the modern kingdom’s vital infrastructure by building schools, hospitals and roads — the company has even worked with the government on a programme to eradicate malaria."
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"More than 60,000 fans packed into Saudi Arabia’s Shining Jewel sports arena at its opening ceremony in May 2014, before the final of the country’s main football tournament. The inauguration featured a stunning fireworks display in honour of the late King Abdullah bin Abdulaziz Al Saud, who had commissioned the stadium in Jeddah to showcase Saudi’s place as a leading Arab nation. The arena was built swiftly and to a high quality. But the work was not managed by a specialist contractor — it was the endeavour of the state-owned energy behemoth Saudi Aramco. Amin Nasser, chief executive, said on accepting an award for architectural excellence last year that the company “continues to support the progress of the nation”. Projects such as the Shining Jewel reflect how Saudi Aramco’s role stretches far beyond its status as the world’s largest oil company and the source of 70 per cent of the Saudi government’s revenue. Saudi Aramco has been responsible for a significant chunk of the modern kingdom’s vital infrastructure by building schools, hospitals and roads — the company has even worked with the government on a programme to eradicate malaria."
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Etisalat Nigeria negotiates over $1.2 billion bank loan | The National
Etisalat Nigeria negotiates over $1.2 billion bank loan | The National:
"Etisalat Nigeria is still in discussions with Nigerian banks to refinance a US$1.2 billion bank loan, the telecommunications company’s largest shareholder, Mubadala Invesment Company, confirmed on Sunday. Etisalat Nigeria, which is 45 per cent owned by the Abu Dhabi strategic investment firm, has run into difficulties meeting its commitments on the loan, which was arranged by a syndicate of local banks in 2013 and declared in default this past March following two severe devaluations of Nigeria’s currency, the naira. "Etisalat Nigeria remains in ongoing discussions with all stakeholders, including government regulators and its syndicated finance facility lenders," according to a Mubadala official. He declined to comment on reports in several Nigerian news outlets last week that Etisalat Nigeria’s controlling Abu Dhabi partners had threatened to stop supporting the company if the bank syndicate would not agree to new terms, which include taking a significant "haircut" on the loan."
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"Etisalat Nigeria is still in discussions with Nigerian banks to refinance a US$1.2 billion bank loan, the telecommunications company’s largest shareholder, Mubadala Invesment Company, confirmed on Sunday. Etisalat Nigeria, which is 45 per cent owned by the Abu Dhabi strategic investment firm, has run into difficulties meeting its commitments on the loan, which was arranged by a syndicate of local banks in 2013 and declared in default this past March following two severe devaluations of Nigeria’s currency, the naira. "Etisalat Nigeria remains in ongoing discussions with all stakeholders, including government regulators and its syndicated finance facility lenders," according to a Mubadala official. He declined to comment on reports in several Nigerian news outlets last week that Etisalat Nigeria’s controlling Abu Dhabi partners had threatened to stop supporting the company if the bank syndicate would not agree to new terms, which include taking a significant "haircut" on the loan."
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MSCI to Decide on Saudi Emerging Markets Inclusion - Bloomberg
MSCI to Decide on Saudi Emerging Markets Inclusion - Bloomberg:
"Abu Dhabi Commercial Bank Head of Investment Strategy Luciano Jannelli discusses his outlook for the MSCI's decision on Saudi Arabian emerging market inclusion. He speaks on "Bloomberg Markets: Middle East." (Source: Bloomberg)"
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"Abu Dhabi Commercial Bank Head of Investment Strategy Luciano Jannelli discusses his outlook for the MSCI's decision on Saudi Arabian emerging market inclusion. He speaks on "Bloomberg Markets: Middle East." (Source: Bloomberg)"
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MIDEAST STOCKS-Dubai's Tabreed surges on Engie investment, MSCI hopes keeps Saudi afloat | Reuters
MIDEAST STOCKS-Dubai's Tabreed surges on Engie investment, MSCI hopes keeps Saudi afloat | Reuters:
"Most stock markets in the Gulf were marginally higher in early trade on Monday, shrugging off weak oil prices as investors focused on local corporate and market news. Shares of Dubai's National Central Cooling Co (Tabreed) surged their 15 percent daily limit to 2.12 dirhams ($0.58) after French power and gas group Engie SA agreed to buy 40 percent stake for 2.8 billion dirhams from majority owner Abu Dhabi's Mubadala. Mubadala will convert its mandatory convertible bonds into shares, with 1.086 billion shares to be transferred to Engie at approximately 2.62 dirhams each."
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"Most stock markets in the Gulf were marginally higher in early trade on Monday, shrugging off weak oil prices as investors focused on local corporate and market news. Shares of Dubai's National Central Cooling Co (Tabreed) surged their 15 percent daily limit to 2.12 dirhams ($0.58) after French power and gas group Engie SA agreed to buy 40 percent stake for 2.8 billion dirhams from majority owner Abu Dhabi's Mubadala. Mubadala will convert its mandatory convertible bonds into shares, with 1.086 billion shares to be transferred to Engie at approximately 2.62 dirhams each."
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Mena private equity industry faces fund-raising challenges | GulfNews.com
Mena private equity industry faces fund-raising challenges | GulfNews.com:
"Fund raising remained challenging for the private equity and venture capital business in the region in 2016 and the conditions are likely to remain the same in 2017, according to Mena Private Equity and Venture Capital Annual Report. Conditions remain challenging due to economic headwinds and geopolitical factors. While seven funds were raised in 2016, the number of closes declined to nine and funds raised were at a low of $582 million. The largest Mena focused fund raised was the Gulf Capital’s $250 million (Dh017.9 million) Gulf Credit Opportunities Fund II, a mid-market focused debt fund. Other major funds raised included the $110-million NBK Mezzanine Fund. "
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"Fund raising remained challenging for the private equity and venture capital business in the region in 2016 and the conditions are likely to remain the same in 2017, according to Mena Private Equity and Venture Capital Annual Report. Conditions remain challenging due to economic headwinds and geopolitical factors. While seven funds were raised in 2016, the number of closes declined to nine and funds raised were at a low of $582 million. The largest Mena focused fund raised was the Gulf Capital’s $250 million (Dh017.9 million) Gulf Credit Opportunities Fund II, a mid-market focused debt fund. Other major funds raised included the $110-million NBK Mezzanine Fund. "
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If Dana's Sukuk Is Illegal Now, It Was Illegal Then, Lawyer Says - Bloomberg
If Dana's Sukuk Is Illegal Now, It Was Illegal Then, Lawyer Says - Bloomberg:
"Nothing in Islamic finance or the United Arab Emirates’ laws regarding Shariah-compliant debt has changed since Dana Gas PJSC restructured its sukuk about four years ago. "What makes the sukuk illegal now?” asks Rizwan Kanji, a partner at law firm King & Spalding LLP. When the gas producer started negotiations with creditors in 2012, the issue relating to mudarabah structures was “clear and settled,” said the Dubai-based lawyer who specializes in Shariah-compliant deals. Since then, there have been no changes in Islamic finance or related U.A.E. laws, so if the company’s claims that its $700 million bonds are illegal now, then they were illegal when they were issued, he said. Dana Gas said last week it no longer considered its two securities Shariah-compliant under the U.A.E.’s law. A court in Sharjah has since barred bondholders from taking any action against the bonds until it reviews the company’s application to declare its debt “unlawful and unenforceable.”"
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"Nothing in Islamic finance or the United Arab Emirates’ laws regarding Shariah-compliant debt has changed since Dana Gas PJSC restructured its sukuk about four years ago. "What makes the sukuk illegal now?” asks Rizwan Kanji, a partner at law firm King & Spalding LLP. When the gas producer started negotiations with creditors in 2012, the issue relating to mudarabah structures was “clear and settled,” said the Dubai-based lawyer who specializes in Shariah-compliant deals. Since then, there have been no changes in Islamic finance or related U.A.E. laws, so if the company’s claims that its $700 million bonds are illegal now, then they were illegal when they were issued, he said. Dana Gas said last week it no longer considered its two securities Shariah-compliant under the U.A.E.’s law. A court in Sharjah has since barred bondholders from taking any action against the bonds until it reviews the company’s application to declare its debt “unlawful and unenforceable.”"
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Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly
Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly:
"The blockade against Qatar is undoubtedly causing difficulties for the citizens on the small Persian Gulf emirate. But its isolation is far from complete, and chinks in the wall are a clear indication that the connections that exist between Qatar and its uneasy neighbors cannot easily be broken. And, it looks like energy markets can survive the policy.Qatar's rulers built the country's independence on exports of hydrocarbons -- particularly natural gas -- and flows of these commodities have been put at risk by the restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.As I noted last week, the precise nature of these restrictions is far from clear. Some authorities in Saudi Arabia and the U.A.E. say any vessel travelling to or from Qatar cannot enter their ports. More recently, the U.A.E.'s Federal Transport Authority limited the ban to those that are Qatari-owned or flagged, and to the loading or unloading of ships trading with Qatar."
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"The blockade against Qatar is undoubtedly causing difficulties for the citizens on the small Persian Gulf emirate. But its isolation is far from complete, and chinks in the wall are a clear indication that the connections that exist between Qatar and its uneasy neighbors cannot easily be broken. And, it looks like energy markets can survive the policy.Qatar's rulers built the country's independence on exports of hydrocarbons -- particularly natural gas -- and flows of these commodities have been put at risk by the restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.As I noted last week, the precise nature of these restrictions is far from clear. Some authorities in Saudi Arabia and the U.A.E. say any vessel travelling to or from Qatar cannot enter their ports. More recently, the U.A.E.'s Federal Transport Authority limited the ban to those that are Qatari-owned or flagged, and to the loading or unloading of ships trading with Qatar."
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Mubadala in talks to buy stake in hotel group from 1MDB-linked Low: FT | Reuters
Mubadala in talks to buy stake in hotel group from 1MDB-linked Low: FT | Reuters:
"UAE state fund Mubadala Development Co PJSC is in talks with the U.S. Department of Justice for approval to buy the rest of the partially-owned Viceroy Hotel Group from Jho Low, a financier linked by prosecutors to Malaysia's 1MDB corruption scandal, the Financial Times reported on Sunday. Mubadala hoped to finalize a deal, that would need the DoJ's approval, to buy 50 percent of Viceroy Hotel Group "within a matter of days," the Financial Times reported, citing one person aware of the matter. The Abu Dhabi fund already owns 50 percent of Viceroy, which has more than a dozen hotels across the world, while the remainder is owned by Low and affiliates that purchased rights to and interests in the hotel group with funds from 1Malaysia Development Berhad (1MDB), the newspaper said. "
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"UAE state fund Mubadala Development Co PJSC is in talks with the U.S. Department of Justice for approval to buy the rest of the partially-owned Viceroy Hotel Group from Jho Low, a financier linked by prosecutors to Malaysia's 1MDB corruption scandal, the Financial Times reported on Sunday. Mubadala hoped to finalize a deal, that would need the DoJ's approval, to buy 50 percent of Viceroy Hotel Group "within a matter of days," the Financial Times reported, citing one person aware of the matter. The Abu Dhabi fund already owns 50 percent of Viceroy, which has more than a dozen hotels across the world, while the remainder is owned by Low and affiliates that purchased rights to and interests in the hotel group with funds from 1Malaysia Development Berhad (1MDB), the newspaper said. "
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Qatar won't cut gas to UAE: Qatar Petroleum CEO | Reuters
Qatar won't cut gas to UAE: Qatar Petroleum CEO | Reuters:
"Qatar will not cut off gas to the United Arab Emirates despite a diplomatic dispute and a "force majeure" clause in its contract, the chief executive of Qatar Petroleum told Al Jazeera network, two weeks after some Gulf Arab states severed ties with Doha. CEO Saad al-Kaabi said that although there was a "force majeure" clause in the agreement on the Dolphin gas pipeline, which links Qatar's giant North Field with the UAE, Qatar would not stop supplies for other reasons. "The siege we have today is a force majeure and we could close the gas pipeline to the UAE," he said."
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"Qatar will not cut off gas to the United Arab Emirates despite a diplomatic dispute and a "force majeure" clause in its contract, the chief executive of Qatar Petroleum told Al Jazeera network, two weeks after some Gulf Arab states severed ties with Doha. CEO Saad al-Kaabi said that although there was a "force majeure" clause in the agreement on the Dolphin gas pipeline, which links Qatar's giant North Field with the UAE, Qatar would not stop supplies for other reasons. "The siege we have today is a force majeure and we could close the gas pipeline to the UAE," he said."
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UPDATE 1-Dubai's DSI to complete capital reduction by end of third quarter | Reuters
UPDATE 1-Dubai's DSI to complete capital reduction by end of third quarter | Reuters:
"Dubai-based contractor Drake & Scull International (DSI) expects to complete a plan to reduce its capital by 75 percent by the end of the third quarter, deferring the process by one month, its chief executive said on Sunday.
The capital reduction is the first phase of a plan to revive DSI's fortunes amid a slump in the Gulf's construction market as governments have cut back on project spending as a result of the fall in oil prices.
Strategic investor Tabarak Investment has become DSI's biggest shareholder after acquiring the shares of former chief executive Khaldoun Tabari, DSI confirmed last week. Tabarak's stake stands at about 18 to 20 percent after the sale, Zawya, a Thomson Reuters service, reported on June 11, citing a source."
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"Dubai-based contractor Drake & Scull International (DSI) expects to complete a plan to reduce its capital by 75 percent by the end of the third quarter, deferring the process by one month, its chief executive said on Sunday.
The capital reduction is the first phase of a plan to revive DSI's fortunes amid a slump in the Gulf's construction market as governments have cut back on project spending as a result of the fall in oil prices.
Strategic investor Tabarak Investment has become DSI's biggest shareholder after acquiring the shares of former chief executive Khaldoun Tabari, DSI confirmed last week. Tabarak's stake stands at about 18 to 20 percent after the sale, Zawya, a Thomson Reuters service, reported on June 11, citing a source."
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'No Borders, Only Horizons' Qatar Ad Says Amid Shut Gulf Skies - Bloomberg
'No Borders, Only Horizons' Qatar Ad Says Amid Shut Gulf Skies - Bloomberg:
"A Qatar Airways ad called for open skies in a video with stretching horizons and embracing families after Gulf neighbors blocked their airspace to the state-owned carrier amid a diplomatic crisis. “The sky: there should be no borders up here, only horizons,” the ad on YouTube says. “Travel goes beyond borders and prejudice.”"
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"A Qatar Airways ad called for open skies in a video with stretching horizons and embracing families after Gulf neighbors blocked their airspace to the state-owned carrier amid a diplomatic crisis. “The sky: there should be no borders up here, only horizons,” the ad on YouTube says. “Travel goes beyond borders and prejudice.”"
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