Bahrain: Building bonds
With recent news of a planned new Islamic bond issue, Bahrain’s economy may be set to receive a welcome boost. The issuance may also come as a boon for the Gulf state’s financial services sector, which is a central part of its Economic Vision 2030, the long-term plan to promote the country as a leading regional and international financial center. Bahrain faced ratings downgrades after civil unrest in February, followed a month later by the delay of a planned $1 billion sovereign bond issue after debt insurance costs hit 18-month highs. However, on September 19, state news agency BNA reported the government had set up a framework to issue up to BD3.5 billion ($9.3 billion) in bonds, earmarking the proceeds of the bond sale to help bridge its budget deficit, which stands at about 5% of GDP. “The finance minister is authorized to issue in accord with Bahrain’s Central Bank up to BD3.5 billion ($9.3 billion) in public treasury bonds ... called development bonds and Islamic sharia-compliant instrument in the kingdom or abroad,” said a decree issued by Bahrain’s King Hamad bin Isa Al Khalifa, BNA reported. Indeed, Islamic bond issuances in particular could prove to be the strong point of Bahrain’s efforts to attract financing. The king gave no timeframe for the issuance, but during a September 25 interview at the International Monetary Fund (IMF) in New York, Central Bank governor Rasheed Al Maraj said that Bahrain had hired Standard Chartered, Citigroup and BNP Paribas to advise on a $1 billion sukuk (Islamic bond) sale, scheduled for October. Global sales of sukuk climbed to more than $17 billion in 2011, compared with more than $10 billion in 2010, according to data compiled by Bloomberg.
Source: Oxford Business Group
Mashreq leads loan syndicate for Bank of Ceylon
Dubai lender Mashreq said it had led a syndication of banks to raise a $140 million loan for Sri Lanka's Bank of Ceylon. Ten regional banks participated in the facility, including Oman's Bank Sohar and Bank Dhofar, Qatar's Doha Bank and UAE lenders Emirates NBD and Union National Bank. The statement did not provide details on the terms of the loan, including the tenor and pricing, but said the deal was oversubscribed. Mashreq acted as the mandated lead arranger, book runner and facility agent for the syndication.
Qatar now top investor in Lagardere
Qatar Holding, an investment vehicle of the state's government, has raised its stake in French media-to-aerospace conglomerate Lagardere to over 10%, market regulator AMF said. The move appeared to make the emirate the largest stakeholder in Lagardere, which competes with Pearson Plc and Bertelsmann AG in radio and book publishing. AMF said Qatar Holding had informed it earlier on Thursday of its accumulation of 13.2 million shares in Lagardere, or 10.1% of its capital. Qatar Holding is a unit of the Qatar Investment Authority, the emirate's sovereign wealth fund, which previously held 9.97 million shares, or 7.6% of Lagardere's capital. The move, which gives the investment vehicle a 7.9% voting rights stake, was carried out through off-market purchases, the regulator said. Qatar has been a staunch supporter of Arnaud Lagardere even as some shareholders have assailed the chief executive's strategy for the company his father founded.
Kuwait: Balancing act
Capital markets in Kuwait, like those in many GCC countries, are currently experiencing a challenging period, with investors largely staying on the sidelines in light of global economic uncertainties. Nonetheless, positive signs have recently emerged from the country, including the potential for two bond issuances in the near future, as well as the successful completion of a six-month transitional phase for the Capital Markets Authority (CMA), the country’s first independent stock market regulator. On December 15, Commercial Facilities Company SAK (CFC), Kuwait’s largest non-bank consumer finance firm, announced the successful completion of a KD50 million ($180 million) bond, the largest of its previous issuances. The four-year amortizing note has a coupon that is priced at the Central Bank of Kuwait (CBK) discount rate plus 140 basis points. Proceeds from the bond, which has been rated BBB by ratings agency Capital Intelligence, will be used for general corporate purposes. NBK Capital is the lead manager for the issuance. “This issuance is an important one as it comes at a vital time for financial institutions that are flushed with liquidity, giving them a solid, profitable and prudent investment opportunity in one of Kuwait’s blue-chip companies,” Salah Al Fulaij, the CEO of NBK Capital, told local press. The CFC bond is the first dinar-denominated note to be offered in 2011. The last local currency bond was issued in June 2010, when United Real Estate Company, a Kuwait-based real estate developer, floated a KD40 million ($144.2 million) bond. The only other fixed-income offering in Kuwait during 2010 was a $500 million, 10-year issuance by Kuwait Projects Company (KIPCO), the country’s largest investment company (IC), under its $2 billion Euro Medium Term Note program.
Source: Oxford Business Group
Egypt to offer $830m 5-year bonds
Egypt's Finance Ministry will offer 5 billion Egyptian pounds ($830.23 million) in three- and five-year bonds at an auction on January 2, the central bank said in late December. Yields on Egyptian government debt have soared this month to their highest in years as the government struggles to finance a growing budget deficit. Local banks have nearly exhausted their liquidity and political turmoil has scared off foreign investors. Investors did not take up the full amount offered at the government's last three bond auctions. The central bank will offer 3 billion pounds of the three-year bonds, which mature on January 3, 2015, and 2 billion pounds of the five-year bonds, which mature on January 3, 2017. The central bank is acting on behalf of the Finance Ministry. Settlement is on January 3, 2012.
UK Islamic bank eyes 30% Rasmala stake
UK-based European Islamic Investment Bank (EIIB) is in talks to acquire a 30% stake in Dubai-based Rasmala Investment Bank, two sources with knowledge of the matter told Reuters at the end of December. The acquisition, which is set to be completed in early 2012, will be made through a fresh issue of shares by Rasmala, which EIIB will buy, the sources said. Rasmala's chairman, Ali al Shihabi, told Reuters in November that it was in talks about a capital boost. Rasmala's chief executive officer, Anwar Abu Sbaitan, declined to comment.
Bank Muscat plans $260m rights issue
Oman's Bank Muscat, the sultanate's largest bank by assets, will launch a rights issue in the second quarter of 2012, subject to regulatory approval, the bank said in a bourse statement in late December. The 100 million Omani riyals ($259.7 million) rights issue will see shares offered at a 20% discount to market price, the statement said, although it added that further details about the offering would be published once it had got the regulator's sign-off. Standard & Poor's raised its long-term rating on Bank Muscat to A- from BBB+ in December, citing "its strong business position, strong capital and earnings, moderate risk position, average funding, and adequate liquidity."
HSBC Saudi launches new equity fund
HSBC has launched a new freestyle equity fund to generate long-term capital growth through investments in equities of Shariah-compliant companies listed on the Saudi Stock Exchange. The new fund, HSBC Amanah Saudi Freestyle Equity Fund, will not be constrained by weights of companies or sectors in the benchmark and will be invested in a concentrated portfolio of high conviction equity picks in the Saudi equity market, said a HSBC Saudi statement. The freestyle concept allows the fund managers to manage the fund on an active basis and invest in companies that show a strong potential to outperform in the long-term, the bank added. Osama Shaker, managing director and head of financial markets at HSBC Saudi Arabia, said the bank has a long track record of managing equities in the Kingdom. 'Given our strong track record in the Saudi equity market and our capabilities in stock selection, this new fund is based on HSBC Saudi Arabia's core strengths and offers investors a new approach to investing in Saudi equities,' he added.
Source: TradeArabia News Service
Qatari royals, Luxembourg to buy Dexia unit
Qatar's royal family and Luxembourg are to buy Dexia's private banking arm Banque Internationale Luxembourg for 730 million euros ($950 million), as part of the Franco-Belgian group's bailout plan. ‘Precision Capital, a Qatari investment group, will acquire 90% of the stake, the remaining 10% will be acquired by the Grand Duchy of Luxembourg,' Dexia said. Luxembourg-based Precision Capital, owned by members of Qatar's Al-Thani royal family, has previously invested in European banks, among them British lender Barclays in an emergency fundraising three years ago. In October, Morgan Stanley estimated the value of BIL at 1.0-1.7 billion euros. BIL's stakes in Dexia Asset Management Luxembourg and RBC Dexia Investor Services will be sold separately. Its portfolio of legacy securities and stakes in Dexia LDG Banque and Parfipar will be transferred to Dexia. Belgium, France and Luxembourg bailed out Dexia in October.
Bank Muscat to launch Islamic banking arm
Bank Muscat, Oman's largest bank by assets, will set up a sharia-compliant banking arm, it said in a statement, becoming the latest financial institution to announce plans to operate in the Islamic finance sector. Operating under the Meethaq brand name, the bank will function independently from the conventional arm and has appointed a three-member sharia board. No timeframe for the start of operations was given, with the new bank still subject to the Central Bank of Oman's approval, the statement added. Oman said in May it would allow Islamic banking in the country for the first time, in an attempt to keep investment funds in the Gulf state and grab a share of the rapidly growing industry. Earlier this month, Standard Chartered said it was studying whether to offer Islamic banking in Oman. So far, two new Islamic banks have been granted banking licenses - Bank Nizwa and Al Izz International Bank - while conventional lenders are also allowed to establish Islamic banking windows, as Bank Muscat has done.
Maybank, GIB arrange $2.27bn for Binladin
The investment banking arm of Malayan Banking and Bahrain's Gulf International Bank have arranged an 8.5 billion Saudi riyal ($2.27 billion) Islamic financing facility for Saudi Binladin Group Limited, the Malaysian bank said. Twelve banks participated in the facility including Abu Dhabi Commercial Bank, Samba Financial Group, Ahli United Bank and Emirates NBD Bank, Maybank said in a statement. The proceeds would be used to help finance the expansion of King Abdulaziz International Airport, the third largest airport in Saudi Arabia, it said.