Thursday 26 November 2009
Saudi-backed GIB pulls bond sale on Dubai debt move-sources
A dollar bond sale by Saudi-backed Gulf International Bank (GIB) was pulled after Dubai said it was seeking to delay repayment on billions of debt owed by its two flagship firms, sources said on Thursday.
The five-year bond for GIB, with an expected deal size of $500 million, was due to close on Wednesday but pricing failed to go ahead after Dubai's shock announcement. [ID:nGEE5AO2L1]
"Dubai is a massive event and we decided it would be prudent to postpone the GIB deal," said a syndicate member at one of the arranging banks.
The five-year bond for GIB, with an expected deal size of $500 million, was due to close on Wednesday but pricing failed to go ahead after Dubai's shock announcement. [ID:nGEE5AO2L1]
"Dubai is a massive event and we decided it would be prudent to postpone the GIB deal," said a syndicate member at one of the arranging banks.
ONGC to Meet Iran Oil Officials Seeking Opportunities
Oil & Natural Gas Corp., India’s biggest energy producer, plans to discuss “specific opportunities” with executives from National Iranian Oil Co. next week, said Chairman and Managing Director R.S. Sharma.
“In import-dependent countries like ours, we have to see where are the future sources of energy supplies,” Sharma said in an interview in his office in New Delhi. “Iran, they have the second-largest crude oil and gas reserves and they are not very well exploited.”
India is competing with countries including China and South Korea for natural resources overseas as output from domestic fields declines and requirements increase in the world’s second- fastest growing major economy. Domestic demand for oil may grow at as much as 4 percent in 2010, Sharma said. ONGC’s plans to develop projects in Iran have been delayed by the ongoing attempts to halt the Middle Eastern nation’s nuclear program.
“In import-dependent countries like ours, we have to see where are the future sources of energy supplies,” Sharma said in an interview in his office in New Delhi. “Iran, they have the second-largest crude oil and gas reserves and they are not very well exploited.”
India is competing with countries including China and South Korea for natural resources overseas as output from domestic fields declines and requirements increase in the world’s second- fastest growing major economy. Domestic demand for oil may grow at as much as 4 percent in 2010, Sharma said. ONGC’s plans to develop projects in Iran have been delayed by the ongoing attempts to halt the Middle Eastern nation’s nuclear program.
Anger mingles with frustration in Dubai
A palpable sense of anger mingled with frustration in Dubai on Thursday as bankers and analysts tried to digest the implications of Wednesday’s shock announcement that Dubai World, a strategic developer, was seeking a standstill on its debt.
“The credibiilty of these guys has been found wanting. Whether there is a default or not the biggest issue is going to be credibility,” one senior analyst at an international bank, who had been talking to international and local clients overnight, said in Dubai.
“There is some suggestion that Dubai may have wanted to go it alone but you don’t go it alone when, rightly or wrongly, you have this bellweather bond payment falling due,” he said, referring to a $4bn payment due by Nakheel, a real estate developer, next month.
“The credibiilty of these guys has been found wanting. Whether there is a default or not the biggest issue is going to be credibility,” one senior analyst at an international bank, who had been talking to international and local clients overnight, said in Dubai.
“There is some suggestion that Dubai may have wanted to go it alone but you don’t go it alone when, rightly or wrongly, you have this bellweather bond payment falling due,” he said, referring to a $4bn payment due by Nakheel, a real estate developer, next month.
Dubai has a lot of explaining to do
It came in a short statement about the restructuring of Dubai World, one of the emirate’s biggest and best-known companies, with the big news buried towards the end.
But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come.
For months, all indications in Dubai were that the heavily indebted city-state, symbol of the rise of the region as an economic powerhouse as much as of the excesses of the pre-financial crunch days, would meet the obligations of the companies it owns, and that Nakheel’s $4bn debt due in December would be repaid.
But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come.
For months, all indications in Dubai were that the heavily indebted city-state, symbol of the rise of the region as an economic powerhouse as much as of the excesses of the pre-financial crunch days, would meet the obligations of the companies it owns, and that Nakheel’s $4bn debt due in December would be repaid.
FT Alphaville » Blog Archive » Moody’s statement on Dubai downgrades
FT Alphaville » Blog Archive » Moody’s statement on Dubai downgrades
The story continues to develop as the European trading week continues!
The story continues to develop as the European trading week continues!
FT Alphaville » Blog Archive » Nakheel: Famous last words…
FT Alphaville » Blog Archive » Nakheel: Famous last words…
Proof that we live with Global Markets, Eid holidays throughout Muslim nations, yet European markets carry on, also ignoring Thanksgiving close in USA!
Proof that we live with Global Markets, Eid holidays throughout Muslim nations, yet European markets carry on, also ignoring Thanksgiving close in USA!
FT Alphaville » Blog Archive » A forced seller at the LSE?
FT Alphaville » Blog Archive » A forced seller at the LSE?
If sold will it be to Qatar, and possibly triggering a full takeover as 30% will be breached?
Interesting Eid holidays for some.
Also begs the question with regards Nasdaq stake held by Dubai!
If sold will it be to Qatar, and possibly triggering a full takeover as 30% will be breached?
Interesting Eid holidays for some.
Also begs the question with regards Nasdaq stake held by Dubai!
FT Alphaville » Blog Archive » A friend in need…is a friend in de(fault)?
FT Alphaville » Blog Archive » A friend in need…is a friend in de(fault)?
Nakheel 2009 trading at $70, at time of posting, yesterday morning at $111!
Nakheel 2009 trading at $70, at time of posting, yesterday morning at $111!
CDS report: All eyes on Dubai World
Gavan Nolan of Markit wrote this CDS report
European credit indices rallied today as the economic climate remained supportive of risk assets. The Markit iTraxx Europe index closed at 84bp, 1.5bp tighter than yesterday’s level. Both the Markit iTraxx HiVol and Crossover indices outperformed relative to the main and equities, tightening to 132.5bp (4bp, 3%) and 512bp (14bp, 2.7%) respectively.
The US dollar broke though the key $1.50 against the euro, and is now at its weakest level since August 2008. The depreciation of the currency appears to be fuelling investment flows in to risky assets throughout the world, though the benefits to a eurozone looking to export its way out of trouble are questionable. A slew of economic data in the US supported the rally. Personal consumption expenditures, a closely watched indicator at the Fed, rose by 0.7%, better than expected and reversing a drop in the previous month. The number of initial jobless claims fell by 35,000 to 466,000, again beating expectations. Further good news came in the form of 6.2% rise in new home sales, bringing it to its highest level in more than years. The triumvirate of positive data helped offset weak consumer sentiment and durable goods figures.
Greece has been the focus of attention in the sovereign CDS market in recent weeks, and it widened again today to reach a new record wide level. But the real story today came from the Middle East. The Dubai Government announced that it is restructuring Dubai World, an investment company owned by the government, with immediate effect. It has asked creditors for a six-month standstill on its obligations until at least 30 May 2010. Nakheel, a real estate subsidiary of Dubai World, has a convertible bond due next month. The picture is muddied, but it is puzzling that Dubai received $5 billion in bond proceeds from two Abu Dhabi banks but made clear that this is separate from the Dubai World restructuring. From a CDS perspective, much will depend on whether the standstill is voluntary or mandatory. If it is the latter then a credit event is a possibility. Spreads throughout the region widened on the shock news. More volatility can be expected as investors await details of the restructuring.
In Europe the single name market was mixed. Banks were tighter, as were autos and other cyclical sectors. Compass Group widened despite posting annual profits at the top-end of forecasts. Credit investors were concerned by the UK catering firm stating that it is interested in making “infill” acquisitions. Compass is an established defensive name and has performed relatively well during the recession.
In North America, the Markit CDX IG index was flat at 102.5bp, giving back earlier, modest gains. As in Europe the single name picture was mixed with energy and insurance sectors outperforming, while technology, media and telecoms all widened.
European credit indices rallied today as the economic climate remained supportive of risk assets. The Markit iTraxx Europe index closed at 84bp, 1.5bp tighter than yesterday’s level. Both the Markit iTraxx HiVol and Crossover indices outperformed relative to the main and equities, tightening to 132.5bp (4bp, 3%) and 512bp (14bp, 2.7%) respectively.
The US dollar broke though the key $1.50 against the euro, and is now at its weakest level since August 2008. The depreciation of the currency appears to be fuelling investment flows in to risky assets throughout the world, though the benefits to a eurozone looking to export its way out of trouble are questionable. A slew of economic data in the US supported the rally. Personal consumption expenditures, a closely watched indicator at the Fed, rose by 0.7%, better than expected and reversing a drop in the previous month. The number of initial jobless claims fell by 35,000 to 466,000, again beating expectations. Further good news came in the form of 6.2% rise in new home sales, bringing it to its highest level in more than years. The triumvirate of positive data helped offset weak consumer sentiment and durable goods figures.
Greece has been the focus of attention in the sovereign CDS market in recent weeks, and it widened again today to reach a new record wide level. But the real story today came from the Middle East. The Dubai Government announced that it is restructuring Dubai World, an investment company owned by the government, with immediate effect. It has asked creditors for a six-month standstill on its obligations until at least 30 May 2010. Nakheel, a real estate subsidiary of Dubai World, has a convertible bond due next month. The picture is muddied, but it is puzzling that Dubai received $5 billion in bond proceeds from two Abu Dhabi banks but made clear that this is separate from the Dubai World restructuring. From a CDS perspective, much will depend on whether the standstill is voluntary or mandatory. If it is the latter then a credit event is a possibility. Spreads throughout the region widened on the shock news. More volatility can be expected as investors await details of the restructuring.
In Europe the single name market was mixed. Banks were tighter, as were autos and other cyclical sectors. Compass Group widened despite posting annual profits at the top-end of forecasts. Credit investors were concerned by the UK catering firm stating that it is interested in making “infill” acquisitions. Compass is an established defensive name and has performed relatively well during the recession.
In North America, the Markit CDX IG index was flat at 102.5bp, giving back earlier, modest gains. As in Europe the single name picture was mixed with energy and insurance sectors outperforming, while technology, media and telecoms all widened.
“For the general purposes of the Dubai Financial Support Fund…”
As FT Alphaville noted the market was on Wednesday digesting news that the $5bn Dubai had raised from two Abu Dhabi government-controlled banks would not go to paying o
ff Nakheel convert bond holders as expected. Instead the proceeds would go towards the general purposes of the Dubai Financial Support Fund (DFSF).
The DFSF is the support fund created at the onset of the crisis in the Emirates to support the liquidity needs of key government-related entities (GREs). It is being financed by the government’s $20bn debt programme announced in March, of which the $5bn raised on Wednesday was the latest tranche.
The reason why Dubai sovereign CDS markets have been rumbled by the news might very well be connected to the fact that the overall size of the fund’s GRE liabilities has never officially been disclosed.
The likes of Barclays Capital, meanwhile, estimate the liabilities could be as much as $72bn, a figure that runs significantly beyond Dubai’s own ability to refinance without support from Abu Dhabi.
In other words, there’s no telling how big the total hole Dubai has to plug is, much less its strategy for doing so, and more importantly how Dubai World bond holders — the government-owned group which owns Nakheel — rank in the fund’s priorities.
On the latter, the indication from today’s news is that they don’t rank highly at all.
ff Nakheel convert bond holders as expected. Instead the proceeds would go towards the general purposes of the Dubai Financial Support Fund (DFSF).
The DFSF is the support fund created at the onset of the crisis in the Emirates to support the liquidity needs of key government-related entities (GREs). It is being financed by the government’s $20bn debt programme announced in March, of which the $5bn raised on Wednesday was the latest tranche.
The reason why Dubai sovereign CDS markets have been rumbled by the news might very well be connected to the fact that the overall size of the fund’s GRE liabilities has never officially been disclosed.
The likes of Barclays Capital, meanwhile, estimate the liabilities could be as much as $72bn, a figure that runs significantly beyond Dubai’s own ability to refinance without support from Abu Dhabi.
In other words, there’s no telling how big the total hole Dubai has to plug is, much less its strategy for doing so, and more importantly how Dubai World bond holders — the government-owned group which owns Nakheel — rank in the fund’s priorities.
On the latter, the indication from today’s news is that they don’t rank highly at all.
Iraqi bank fund eyes Emirati input
Emirati investors are being targeted by a new fund aimed at funnelling capital to projects in Iraq as the country rebuilds its infrastructure.
The Trade Bank of Iraq plans to launch the fund next January with an initial size of US$250 million (Dh918.2m). That amount could double by the end of next year.
“Iraq is really at an important crossroads,” said Hussein al Uzri, the president and chairman of the Iraqi government-owned bank. “Now we see the businesses coming and substantial numbers of investors.”
The Trade Bank of Iraq plans to launch the fund next January with an initial size of US$250 million (Dh918.2m). That amount could double by the end of next year.
“Iraq is really at an important crossroads,” said Hussein al Uzri, the president and chairman of the Iraqi government-owned bank. “Now we see the businesses coming and substantial numbers of investors.”
Declining revenue hits hotel sector
The hotel sector in Dubai remained depressed last month in what has been a challenging year for the industry.
Hotels in the emirate suffered a 35.3 per cent drop in revenue per available room, the key indicator for the health of the sector, the largest decline in the Middle East and Africa region. Revenue fell to US$198.22 (Dh728.06) per available room last month, from $306.27 in October last year, data from STR Global showed.
The downturn in the global travel market and the increased supply of rooms in Dubai were the main reasons for the fall, said Elizabeth Randall, the managing director of STR Global. Some hoteliers and analysts have described these kinds of levels as the new “norm” for Dubai hotels, which had previously enjoyed what were considered unsustainably high occupancies and rates levels.
Hotels in the emirate suffered a 35.3 per cent drop in revenue per available room, the key indicator for the health of the sector, the largest decline in the Middle East and Africa region. Revenue fell to US$198.22 (Dh728.06) per available room last month, from $306.27 in October last year, data from STR Global showed.
The downturn in the global travel market and the increased supply of rooms in Dubai were the main reasons for the fall, said Elizabeth Randall, the managing director of STR Global. Some hoteliers and analysts have described these kinds of levels as the new “norm” for Dubai hotels, which had previously enjoyed what were considered unsustainably high occupancies and rates levels.
Mystery gold cargo linked to Saad, Gosaibi feud
The Qantas freighter QF71 that took off from Perth Airport on November 3 last year bound for London would not have attracted any special attention, despite the fact that it was carrying 1.2 tonnes of gold bullion, then worth about US$28 million (Dh102.8m).
Perth, in Western Australia, is home to Australia’s Gold Corporation Mint, where bullion is processed and turned into standard 12.5kg bricks.
From there, the ingots are shipped daily around the globe to vaults in America, Europe and Asia, evidence of the world’s apparently insatiable appetite for the precious metal.
Perth, in Western Australia, is home to Australia’s Gold Corporation Mint, where bullion is processed and turned into standard 12.5kg bricks.
From there, the ingots are shipped daily around the globe to vaults in America, Europe and Asia, evidence of the world’s apparently insatiable appetite for the precious metal.
Icons can also fall victim to reality
There is a precedent for yesterday’s extraordinary announcement that executive control of Dubai World is to be handed over to a Government-appointed “chief restructuring officer” as a prelude to a radical reshaping of the group.
General Motors (GM) had the same kind of status in the US that Dubai World has in that emirate: an iconic corporation that encapsulated the ethos of its country.
GM was Cadillac and Chevrolet, brands as American as baseball and apple pie. Dubai World is DP World and the Palms, businesses that have come to symbolise the emirate’s dynamic growth and glamour.
General Motors (GM) had the same kind of status in the US that Dubai World has in that emirate: an iconic corporation that encapsulated the ethos of its country.
GM was Cadillac and Chevrolet, brands as American as baseball and apple pie. Dubai World is DP World and the Palms, businesses that have come to symbolise the emirate’s dynamic growth and glamour.
Abu Dhabi buys into Dubai debt
The US$5 billion (Dh18.36bn) lined up Wednesday by Dubai’s Department of Finance was part of a $20bn bond programme aiming to prop up government entities that borrowed heavily and ran short of cash after the financial crisis.
Dubai raised the first $10bn under the programme in February from the Central Bank. The Dubai Financial Support Fund (DFSF) was established in July to administer the distribution of the cash.
The announcement of another $5bn brings the total so far under the programme to $15bn. Terms of the new bonds were not disclosed, but an adviser to the Government said they were similar to those of the $10bn bond, which came with a 4 per cent interest rate and a 5-year maturity.
Dubai raised the first $10bn under the programme in February from the Central Bank. The Dubai Financial Support Fund (DFSF) was established in July to administer the distribution of the cash.
The announcement of another $5bn brings the total so far under the programme to $15bn. Terms of the new bonds were not disclosed, but an adviser to the Government said they were similar to those of the $10bn bond, which came with a 4 per cent interest rate and a 5-year maturity.
Abu Dhabi banks back $5bn Dubai bond
Dubai’s Department of Finance has raised $5bn from two Abu Dhabi banks as part of a $20bn bond programme being managed by the Dubai Financial Support Fund, the government said today.
National Bank of Abu Dhabi (NBAD) and Al Hilal Bank have agreed to buy as much as $2.5bn each of the Dubai government bonds.
The $5bn adds to a $10bn tranche Dubai borrowed from the Central Bank in February. The emirate has been using funds raised under the $20bn programme to support government-owned companies that had borrowed heavily and ran short of cash in the wake of the financial crisis.
National Bank of Abu Dhabi (NBAD) and Al Hilal Bank have agreed to buy as much as $2.5bn each of the Dubai government bonds.
The $5bn adds to a $10bn tranche Dubai borrowed from the Central Bank in February. The emirate has been using funds raised under the $20bn programme to support government-owned companies that had borrowed heavily and ran short of cash in the wake of the financial crisis.
Dubai World in reorganisation
Dubai World, one of the emirate’s biggest holding companies, says it is reorganising and seeking an agreement with creditors for a six-month extension on its debt.
Dubai World had previously appointed AlixPartners, a turnaround firm that worked on the bankruptcy of General Motors, to organise an internal shake-up.
The company, which owns the ports operator DP World and the property developer Nakheel, said last month that it had eliminated 12,000 jobs as part of a three-year effort to save US$800 million (Dh2.93 billion).
Dubai World had previously appointed AlixPartners, a turnaround firm that worked on the bankruptcy of General Motors, to organise an internal shake-up.
The company, which owns the ports operator DP World and the property developer Nakheel, said last month that it had eliminated 12,000 jobs as part of a three-year effort to save US$800 million (Dh2.93 billion).
Dubai World in major new revamp
Dubai’s efforts to stabilise its economy took several turns yesterday, with the emirate receiving new support from banks in neighbouring Abu Dhabi and then moving to take direct control of Dubai World and seek a delay in payments of the company’s debts.
The emirate said yesterday it had lined up US$5 billion (Dh18.35bn) in financing from the National Bank of Abu Dhabi and Al Hilal Bank, both of which are controlled by one of Abu Dhabi’s largest sovereign wealth funds, the Abu Dhabi Investment Council. The two banks agreed to buy $1bn in Dubai bonds immediately, and purchase the remaining debt over the next year.
Later in the day, Dubai announced that it had appointed a London-based accountant to take over the restructuring efforts at Dubai World, the Government-owned conglomerate, and would ask creditors of Dubai World and its property developer Nakheel to agree to delays in repayment of debts.
The emirate said yesterday it had lined up US$5 billion (Dh18.35bn) in financing from the National Bank of Abu Dhabi and Al Hilal Bank, both of which are controlled by one of Abu Dhabi’s largest sovereign wealth funds, the Abu Dhabi Investment Council. The two banks agreed to buy $1bn in Dubai bonds immediately, and purchase the remaining debt over the next year.
Later in the day, Dubai announced that it had appointed a London-based accountant to take over the restructuring efforts at Dubai World, the Government-owned conglomerate, and would ask creditors of Dubai World and its property developer Nakheel to agree to delays in repayment of debts.
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