- Dubai bailout would spark a complex quid-pro-quo
- Dubai could be headed for bailout Groundhog Day. In 2009, the emirate received a $20 billion lifeline from the United Arab Emirates’ central bank and its richer UAE neighbour, Abu Dhabi. Given the mess Covid-19 could make of Dubai’s open economy, a repeat is far from impossible.Dubai’s $135 billion total debt exceeds its gross domestic product, with over half owed by so-called Government Related Enterprises that were a key headache last time round. With $43 billion of the latter’s borrowings coming due by 2024, a budget deficit, an oversupplied property market and anti-virus measures that Capital Economics reckons could knock 6% off GDP, the risk is foreign investors get nervous. The cost of insuring Dubai’s debt against default has tripled to over 300 basis points since February.Yet Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum deserves some slack. His domain’s relatively open credentials make it more vulnerable to the coronavirus than regional peers. A third of the economy depends on industries like retail and tourism, and the vast majority of workers are expats or migrants. Dubai property prices have been sliding since 2014. The authorities had pinned their hopes – and a 17% jump in public spending in 2020 – on the World Expo scheduled for later this year. It has now been postponed.Crown Prince Mohammed bin Zayed al-Nahyan (MBZ), Abu Dhabi’s de facto leader, can afford a bailout. The emirate’s foreign exchange reserves and wealth fund have assets of over $1 trillion, and its current account balances with oil at around $30 a barrel. That means Abu Dhabi can both protect the UAE’s exchange rate, which is pegged to the U.S. dollar, and help struggling neighbours. The question is what MBZ asks for in return.
Friday, 10 April 2020
Cost of Mideast’s Dual Crises Seen at $116 Billion by World Bank - Bloomberg
Cost of Mideast’s Dual Crises Seen at $116 Billion by World Bank - Bloomberg:
The shockwaves set off by the crash in oil prices and the coronavirus pandemic have been so fast-moving that economists can barely keep up.
Changes in forecasts for the Middle East and North Africa, or MENA, put the toll inflicted on the region as of April 1 at approximately $116 billion, or about 3.7% of last year’s gross domestic product, relative to the outlook on March 19, according to the World Bank.
In its latest regional economic update, released on Thursday, the lender highlighted the lack of clarity. “Estimates of the costs of the current crisis are fluid, because it is difficult to predict how the global economy, national policies, and societies will react as the pandemic spreads,” it said.
The region is near the epicenter of both crises besetting the global economy. Home to some of the world’s largest oil producers, the Middle East is also contending with a rising number of coronavirus cases and in Iran has one of the biggest outbreaks of the disease outside China.
The shockwaves set off by the crash in oil prices and the coronavirus pandemic have been so fast-moving that economists can barely keep up.
Changes in forecasts for the Middle East and North Africa, or MENA, put the toll inflicted on the region as of April 1 at approximately $116 billion, or about 3.7% of last year’s gross domestic product, relative to the outlook on March 19, according to the World Bank.
In its latest regional economic update, released on Thursday, the lender highlighted the lack of clarity. “Estimates of the costs of the current crisis are fluid, because it is difficult to predict how the global economy, national policies, and societies will react as the pandemic spreads,” it said.
The region is near the epicenter of both crises besetting the global economy. Home to some of the world’s largest oil producers, the Middle East is also contending with a rising number of coronavirus cases and in Iran has one of the biggest outbreaks of the disease outside China.
Oil-Price War Latest News: OPEC, #SaudiArabia, Russia and U.S. - Bloomberg
Oil-Price War Latest News: OPEC, Saudi Arabia, Russia and U.S. - Bloomberg:
A historic multilateral deal to lower global oil production and stabilize prices, led by record cuts from Saudi Arabia and Russia, is at risk as Mexico refuses to agree to the proposed curbs.
The impasse threw into doubt efforts to revive the market from a debilitating coronavirus-induced slump. The deal by the group of nations known as OPEC+, which dwarfs previous interventions and has been encouraged by U.S. President Donald Trump, is also aimed at ending the price war between Riyadh and Moscow that helped pushed oil down to the lowest in almost two decades.
The deal is conditional on the consent of Mexico, which was the only participant not to agree to the proposal, OPEC said in a statement released after more than nine hours of talks via video link Thursday. The group doesn’t intend to meet again Friday, and will instead focus talks on a Group of 20 gathering scheduled that day, according to a delegate.
A historic multilateral deal to lower global oil production and stabilize prices, led by record cuts from Saudi Arabia and Russia, is at risk as Mexico refuses to agree to the proposed curbs.
The impasse threw into doubt efforts to revive the market from a debilitating coronavirus-induced slump. The deal by the group of nations known as OPEC+, which dwarfs previous interventions and has been encouraged by U.S. President Donald Trump, is also aimed at ending the price war between Riyadh and Moscow that helped pushed oil down to the lowest in almost two decades.
The deal is conditional on the consent of Mexico, which was the only participant not to agree to the proposal, OPEC said in a statement released after more than nine hours of talks via video link Thursday. The group doesn’t intend to meet again Friday, and will instead focus talks on a Group of 20 gathering scheduled that day, according to a delegate.
GEMS founder said to be in talks to sell stake in company - Arabianbusiness
GEMS founder said to be in talks to sell stake in company - Arabianbusiness:
The founder of Dubai-based GEMS Education held talks to sell some of his majority stake in the private-school operator to raise as much as $200 million, according to people with knowledge of the matter.
Sunny Varkey, who transformed GEMS into one of the world’s largest private education providers, is working with Rothschild & Co. to find potential investors, the people said, asking not to be identified as the matter is private.
The bank has recently struggled to find any interested parties because of the coronavirus pandemic and the discussions may not result in a deal, the people said. Representatives for GEMS and Rothschild declined to comment.
The founder of Dubai-based GEMS Education held talks to sell some of his majority stake in the private-school operator to raise as much as $200 million, according to people with knowledge of the matter.
Sunny Varkey, who transformed GEMS into one of the world’s largest private education providers, is working with Rothschild & Co. to find potential investors, the people said, asking not to be identified as the matter is private.
The bank has recently struggled to find any interested parties because of the coronavirus pandemic and the discussions may not result in a deal, the people said. Representatives for GEMS and Rothschild declined to comment.
Global oil output cuts held hostage to Mexican standoff - Reuters
Global oil output cuts held hostage to Mexican standoff - Reuters:
Oil producers in the OPEC+ group, led by Saudi Arabia and Russia, were expected to pressure Mexico on Friday to seal an accord for a collective cut in output of 10 million barrels per day, before asking other nations for a further 5 million bpd of cuts.
The United States has encouraged global cooperation to bolster an oil market that collapsed as the coronavirus pandemic accelerated in March and producers resorted to a price war after failing to agree on how to prop up prices.
Oil prices tumbled on Thursday despite OPEC+ nearing agreement as the lockdowns ordered across the world sucked life out of the global economy, and traders reckoned that even a combined reduction of 15 million bpd would be too little to stabilise the market.
Markets were closed for the Good Friday holiday in major centres. But on Thursday, Brent oil prices LCOc1, which hit an 18-year low last month, were trading around $32 a barrel, half their level at the end of 2019.
Oil producers in the OPEC+ group, led by Saudi Arabia and Russia, were expected to pressure Mexico on Friday to seal an accord for a collective cut in output of 10 million barrels per day, before asking other nations for a further 5 million bpd of cuts.
The United States has encouraged global cooperation to bolster an oil market that collapsed as the coronavirus pandemic accelerated in March and producers resorted to a price war after failing to agree on how to prop up prices.
Oil prices tumbled on Thursday despite OPEC+ nearing agreement as the lockdowns ordered across the world sucked life out of the global economy, and traders reckoned that even a combined reduction of 15 million bpd would be too little to stabilise the market.
Markets were closed for the Good Friday holiday in major centres. But on Thursday, Brent oil prices LCOc1, which hit an 18-year low last month, were trading around $32 a barrel, half their level at the end of 2019.
Oil sinks as market doubts OPEC supply cuts will be enough - Reuters
Oil sinks as market doubts OPEC supply cuts will be enough - Reuters:
Oil prices tumbled on Thursday on doubts that a deal between OPEC and allies to make a record oil supply cut would be enough to offset the collapse in global fuel demand caused by the coronavirus pandemic.
The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, agreed to cut output by 10 million barrels per day from May, the group said in a statement.
Before the coronavirus outbreak hit global transportation and economic activity, 10 million bpd was about 10% of global supply.
OPEC+ expects other producers including the United States to cut another 5 million bpd. But Washington has not offered to participate, and even if it did, the combined reduction in supply would be about half the 30% worldwide fall in demand
Brent LCOc1 futures fell $1.36, or 4.1%, to settle at $31.48 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 dropped $2.33, or 9.3%, to settle at $22.76.
Oil prices tumbled on Thursday on doubts that a deal between OPEC and allies to make a record oil supply cut would be enough to offset the collapse in global fuel demand caused by the coronavirus pandemic.
The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, agreed to cut output by 10 million barrels per day from May, the group said in a statement.
Before the coronavirus outbreak hit global transportation and economic activity, 10 million bpd was about 10% of global supply.
OPEC+ expects other producers including the United States to cut another 5 million bpd. But Washington has not offered to participate, and even if it did, the combined reduction in supply would be about half the 30% worldwide fall in demand
Brent LCOc1 futures fell $1.36, or 4.1%, to settle at $31.48 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 dropped $2.33, or 9.3%, to settle at $22.76.
European, Middle Eastern & African Stocks - Bloomberg #UAE #SaudiArabia #Qatar
European, Middle Eastern & African Stocks - Bloomberg:
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
OPEC throws sand in wheels of oil’s runaway train Saud of Damocles
Saudi Arabia and Russia have exceeded low expectations. After spending the last month waging an increasingly damaging price war, the world’s biggest oil producers apart from the United States on Thursday looked to have sketched out a deal to tackle an unprecedented supply glut in the global oil market. It may still not be enough to stop the rot.
Oil producers’ main headache is that demand in what is usually a 100 million barrel a day market may have slumped by as much as 30% because of Covid-19. With storage of little more than 850 million barrels, according to consultant Rystad Energy, space to store the excess black gold could run out in less than a month. Oil prices might then drop from their current $32 a barrel, below the $10 at which many producers stop being able to cover their costs, before markets rebalance.
If Riyadh and Moscow and their various allies cobble together a cut of 10 million barrels per day, as sources suggested to Reuters they might, that would be an achievement. It all hangs on whether the group known as OPEC+, which combines the Organization of the Petroleum Exporting Countries and some other producers, has the means to do what it says. The inability of members to coordinate effectively partly caused a less ambitious output cut to implode in March.
The other problem is that even those 10 million barrels per day may only be a half or a third of what’s required. True, the Group of 20 nations convening for a call on Friday might step up too, but they face the same collective-action issue as OPEC+. And even if everyone agreed to cut 20 million barrels from their daily output for three months, that wouldn’t be sufficient if the demand slump is bigger or extends past June.
#Dubai bailout would spark a complex quid-pro-quo Bailing close to the wind
Dubai could be headed for bailout Groundhog Day. In 2009, the emirate received a $20 billion lifeline from the United Arab Emirates’ central bank and its richer UAE neighbour, Abu Dhabi. Given the mess Covid-19 could make of Dubai’s open economy, a repeat is far from impossible.
Dubai’s $135 billion total debt exceeds its gross domestic product, with over half owed by so-called Government Related Enterprises that were a key headache last time round. With $43 billion of the latter’s borrowings coming due by 2024, a budget deficit, an oversupplied property market and anti-virus measures that Capital Economics reckons could knock 6% off GDP, the risk is foreign investors get nervous. The cost of insuring Dubai’s debt against default has tripled to over 300 basis points since February.
Yet Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum deserves some slack. His domain’s relatively open credentials make it more vulnerable to the coronavirus than regional peers. A third of the economy depends on industries like retail and tourism, and the vast majority of workers are expats or migrants. Dubai property prices have been sliding since 2014. The authorities had pinned their hopes – and a 17% jump in public spending in 2020 – on the World Expo scheduled for later this year. It has now been postponed.
Crown Prince Mohammed bin Zayed al-Nahyan (MBZ), Abu Dhabi’s de facto leader, can afford a bailout. The emirate’s foreign exchange reserves and wealth fund have assets of over $1 trillion, and its current account balances with oil at around $30 a barrel. That means Abu Dhabi can both protect the UAE’s exchange rate, which is pegged to the U.S. dollar, and help struggling neighbours. The question is what MBZ asks for in return.
Coronavirus: #Dubai Stocks Show Harder Hit From Virus, Oil Prices - Bloomberg
Coronavirus: Dubai Stocks Show Harder Hit From Virus, Oil Prices - Bloomberg:
Dubai is being battered harder than its Gulf peers by the twin menace of the pandemic and weak oil prices -- and it’s clear from the performance of the city’s stock market.
The DFM General Index is down 26% since the global equities crash at the start of March. A slump in stock prices as the United Arab Emirates took steps to counter Covid-19, including shutting its borders, deepened as crude spiraled lower.
But markets in Dubai’s neighbors are showing signs of improvement as hopes the worst of the outbreak is over take hold and amid expectations of a production agreement between the biggest oil suppliers that will boost prices. Stock benchmarks in Qatar and Saudi Arabia have almost fully recovered from the sell-off. Abu Dhabi’s main index is down just 15%, further highlighting Dubai’s underperformance.
Dubai is being battered harder than its Gulf peers by the twin menace of the pandemic and weak oil prices -- and it’s clear from the performance of the city’s stock market.
The DFM General Index is down 26% since the global equities crash at the start of March. A slump in stock prices as the United Arab Emirates took steps to counter Covid-19, including shutting its borders, deepened as crude spiraled lower.
But markets in Dubai’s neighbors are showing signs of improvement as hopes the worst of the outbreak is over take hold and amid expectations of a production agreement between the biggest oil suppliers that will boost prices. Stock benchmarks in Qatar and Saudi Arabia have almost fully recovered from the sell-off. Abu Dhabi’s main index is down just 15%, further highlighting Dubai’s underperformance.
NMC Succumbs to Administration After Giving In to Creditors - Bloomberg
NMC Succumbs to Administration After Giving In to Creditors - Bloomberg:
Just two years after its market value soared to more than $10 billion, NMC Health Plc was placed in administration by a London court as the troubled health-care provider succumbed to creditor demands.
NMC, the Middle East’s largest hospital operator, will be run by administrators Alvarez & Marsal, Judge Sebastian Prentis said via videoconference Thursday. It’s a boost for state-owned Abu Dhabi Commercial Bank PJSC, which is owed $963 million. It had pushed for administration in a bid to get management to relinquish control.
Once the Arab world’s top performing stock, the shares of the company founded by Indian entrepreneur Bavaguthu Raghuram Shetty plunged before trading was suspended amid allegations of fraud. Most of NMC’s senior management has resigned since it revealed more than $4 billion of undisclosed debt. The company was also dropped from the FTSE 100 index.
“One of the most striking things about this was that until less than four months ago this company was overtly carrying on business entirely as normal,” Prentis said. “Since then, the wheel has turned and it has kept turning.”
Just two years after its market value soared to more than $10 billion, NMC Health Plc was placed in administration by a London court as the troubled health-care provider succumbed to creditor demands.
NMC, the Middle East’s largest hospital operator, will be run by administrators Alvarez & Marsal, Judge Sebastian Prentis said via videoconference Thursday. It’s a boost for state-owned Abu Dhabi Commercial Bank PJSC, which is owed $963 million. It had pushed for administration in a bid to get management to relinquish control.
Once the Arab world’s top performing stock, the shares of the company founded by Indian entrepreneur Bavaguthu Raghuram Shetty plunged before trading was suspended amid allegations of fraud. Most of NMC’s senior management has resigned since it revealed more than $4 billion of undisclosed debt. The company was also dropped from the FTSE 100 index.
“One of the most striking things about this was that until less than four months ago this company was overtly carrying on business entirely as normal,” Prentis said. “Since then, the wheel has turned and it has kept turning.”
Even OPEC+’s Deep Cuts Couldn’t Keep Oil Markets From Plunging - Bloomberg
Even OPEC+’s Deep Cuts Couldn’t Keep Oil Markets From Plunging - Bloomberg:
Some of the world’s largest oil producers are finalizing a deal that would take an unprecedented 10 million barrels a day of crude off the market in an bid to resuscitate prices pummeled by the coronavirus pandemic.
The market’s crashing anyway.
A marathon OPEC+ video conference that’s still ongoing after eight hours has so far yielded an end to Saudi Arabia’s price war with Russia, established the contours of an historic supply-curb agreement, and laid the foundation for an even broader global accord to trim production. Yet futures in New York ended the day 9% lower while crude in London closed down 4%.
Oil’s seemingly unstoppable collapse underscores just how dramatically demand has deteriorated as the virus ravages world economies and brings modern life to a standstill. More than two-thirds of the world’s population is in lockdown -- not driving, flying or otherwise burning fuel. Consumption is falling faster than anyone predicted, with demand losses seen reaching 35 million barrels a day by some estimates. Against that backdrop, an agreement to eliminate 10% of global crude supply -- while extraordinary -- isn’t a panacea.
Some of the world’s largest oil producers are finalizing a deal that would take an unprecedented 10 million barrels a day of crude off the market in an bid to resuscitate prices pummeled by the coronavirus pandemic.
The market’s crashing anyway.
A marathon OPEC+ video conference that’s still ongoing after eight hours has so far yielded an end to Saudi Arabia’s price war with Russia, established the contours of an historic supply-curb agreement, and laid the foundation for an even broader global accord to trim production. Yet futures in New York ended the day 9% lower while crude in London closed down 4%.
Oil’s seemingly unstoppable collapse underscores just how dramatically demand has deteriorated as the virus ravages world economies and brings modern life to a standstill. More than two-thirds of the world’s population is in lockdown -- not driving, flying or otherwise burning fuel. Consumption is falling faster than anyone predicted, with demand losses seen reaching 35 million barrels a day by some estimates. Against that backdrop, an agreement to eliminate 10% of global crude supply -- while extraordinary -- isn’t a panacea.
Saudi, Russia Historic Production Deal Turns Focus on G-20 - Bloomberg
Saudi, Russia Historic Production Deal Turns Focus on G-20 - Bloomberg:
Saudi Arabia and Russia agreed to record oil production cuts in an effort to revive the market from a debilitating coronavirus-induced slump.
Attention now turns to the Group of 20 energy ministers meeting on Friday. Contribution from major producers including the U.S. and Canada could boost efforts to revive prices after the OPEC+ historic agreement failed to push crude higher on Thursday.
Oil’s spectacular price crash this year has threatened the stability of oil-dependent nations, forced major companies such as Exxon Mobil Corp. to rein in spending and risked the very existence of small independents. OPEC and its allies have been put under intense pressure by President Donald Trump and American lawmakers, who fear thousands of job losses in the U.S. shale patch.
OPEC+, meeting by video conference, tentatively agreed to cut production by about 10 million barrels a day in May and June, delegates said. Saudi Arabia and Russia, the biggest producers in the group, will each take output down to about 8.5 million a day, with all members agreeing to cut supply by 23%, one delegate said.
Saudi Arabia and Russia agreed to record oil production cuts in an effort to revive the market from a debilitating coronavirus-induced slump.
Attention now turns to the Group of 20 energy ministers meeting on Friday. Contribution from major producers including the U.S. and Canada could boost efforts to revive prices after the OPEC+ historic agreement failed to push crude higher on Thursday.
Oil’s spectacular price crash this year has threatened the stability of oil-dependent nations, forced major companies such as Exxon Mobil Corp. to rein in spending and risked the very existence of small independents. OPEC and its allies have been put under intense pressure by President Donald Trump and American lawmakers, who fear thousands of job losses in the U.S. shale patch.
OPEC+, meeting by video conference, tentatively agreed to cut production by about 10 million barrels a day in May and June, delegates said. Saudi Arabia and Russia, the biggest producers in the group, will each take output down to about 8.5 million a day, with all members agreeing to cut supply by 23%, one delegate said.
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