Finance

Dubai: Bond and beyond

Dubai's government is returning to the open bond market, unveiling plans to raise at least US$6.5 billion through a mix of conventional and Sharia-compliant instruments, looking to bank on renewed investor interest and growing confidence in the emirate. On October 26, the Dubai government had released a preliminary prospectus for a Euro Medium-Term Note (EMTN) program to raise US$4 billion, with the funds to be used for infrastructure, financing and general budgetary purposes. Analysts predict that the EMTN coupon rates could be a healthy 6 per cent to 7 per cent, a reflection of the fact that a rating has yet to be given to Dubai's debt. On top of this conventional bond issue, the Department of Finance (DoF) is also looking at raising a further US$2.5 billion in Islamic bonds or sukuk, seeking to tap into the Sharia-compliant segment of the market as it works to spread its investment net as wide as possible.

UAE's Invest AD to launch $400m fund for acquisitions

State-owned Abu Dhabi Invest AD plans to launch an AED1.47 billion (US$400 million) private equity fund aimed at buying up stakes in up to 12 Middle Eastern companies. The fund, Invest AD Private Equity Partners II, is eyeing stakes in firms located in countries including Egypt, Turkey, Saudi Arabia and the UAE, The National English-language newspaper said, citing Samir Assaad, head of private equity at Invest AD. Assaad said the company was taking advantage of cheaper prices as a result of the financial crisis, to raise capital and invest. Invest AD has already developed a fund management arm, raising money from third party investors for investment in the Middle East and Africa region.

Egypt central bank publishes core inflation index

Egypt's central bank began publishing a core inflation index this month, a move seen as increasing transparency about monetary policy in a country where price rises peaked at more than 20 per cent in 2008. The bank has, since 2006, used but not published the index, which strips out subsidized goods and volatile items such as food and energy. Economists have said food price rises have been propping up urban inflation, the most widely watched inflation indicator in Egypt. Energy and some food items are subsidized in Egypt. "You can analyze the core inflation and from there analyze future inflation," Deputy Governor Hisham Ramez said. Rania al-Mashat, head of monetary policy division at the central bank, said launching the index did not mean the bank would ignore growth as it sought to control price rises.

UAE's Waha eyes US$1bn buys in maritime financial

Abu Dhabi-based Waha Capital is looking at acquisitions in the maritime financial and leasing services sectors worth up to US$1 billion, Chief Executive Salem al-Noaimi said. "We are looking at acquisitions," he continued. "From the maritime side, we are interested in a regional player, financial services would be regional and leasing would be global." Waha was also working on two structured finance deals for the armed forces of the United Arab Emirates, he said.

Fajr Capital: Launch of Islamic investment firm

Fajr Capital Ltd announced its launch as a new Islamic investment firm focusing on financial services and complementary opportunities in the broader economy in key Muslim markets. With initial funding of approximately US$600 million and access to further capital, the firm brings together a prominent and diverse set of shareholders, including the sovereign investment bodies Khazanah National Berhad of Malaysia, Brunei Investment Agency and Abu Dhabi Investment Council, and the private Saudi-based firm MASIC (a member of the Al Subeaei Group). Fajr Capital, based in the Dubai International Financial Centre and with offices in Kuala Lumpur and London, intends to be an active and enabling investor in its portfolio companies, helping to optimize performance through best-in-class products, service standards, technologies and Sharia expertise. Fajr Capital’s shareholder profile offers further sources of competitive advantage: regional connectivity, cross-market insights, and co-investment opportunities.

DCB issues US$1 billion bonds in another first in the region

Abu Dhabi Commercial Bank, the Emirate of Abu Dhabi’s second-largest lender by total assets, has said that it had agreed to issue US$ 1,000,000,000 of bonds under its newly updated and amended US$5.7 billion global medium term note program. The transaction, according to ADCB press release, is the first ever-global offering by any GCC bank. "The issue will consist of bonds at a fixed coupon of 75.4 per cent. per annum, representing 5.262 bps over US Treasuries , that will mature on 08 October 2014," ADCB's CEO Ala'a Eraiqat said, adding that the issue is the outcome of a very positive response to ADCB's recent investor presentations in Hong Kong, Singapore and London, among other international financial centers.

Saudi, Egypt top banking markets in the region

A recent study placed Saudi Arabia and Egypt amongst the leading banking markets in the Arab region, thanks to potential growth expected in both countries in the long term. The study compiled by Beltone Financial Holding and encompassing the banking market across the Middle East said that Riyadh and Cairo wield solid government support for the banking sector, buoyed by a large population and expansive workforce. Beltone Financial alluded to close cooperation between itself and several Arab countries, especially those perceived as emerging markets.

Bahrain plans bourse shake-up

Bahrain is looking at setting up a new company to run the Bahrain Stock Exchange due to a conflict of interest in the central bank overseeing the bourse. The Central Bank of Bahrain (CBB) currently operates and supervises the exchange, which breaches its own and national laws, said CBB governor Rasheed al-Maraj. Maraj said the new company will be licensed by the Ministry of Industry and Commerce and supervised by the central bank, the paper reported. "We had to come up with a new idea to move the Bahrain Stock Exchange from under our authority, considering that the CBB is there to monitor the stock exchange and not run it as is being done now," he was quoted as saying.