Dubai real estate 'to bounce back' in 2011

23. Feb. 2010

The head of Dubai’s second-largest developer, Deyaar, has claimed that the real estate market will post a recovery in 2011, the third year after its initial crash.

“My personal belief is that Dubai has reached the bottom,” Deyaar CEO Markus Giebel told reporters at a roundtable in Dubai on Monday. “I cannot tell you whether the market will oscillate five percent up or down this year, but I can tell you that it won’t go 20 percent up or down.

“In my personal opinion Dubai will see a recovery in year three, by which I mean 2011.”

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The Deyaar executive said that Dubai’s fundamentals were still strong and observers, particularly the media, had underestimated the emirate’s strength.

“If you believe in Dubai, you should believe in Dubai’s real estate sector. Because if Dubai is healthy, then the real estate sector will be as well,” Giebel added.

The Deyaar CEO indicated that 2010 would be “the year of the contractor” and insisted that the firm had less than AED100m ($27m) in accounts payable to contractors.

Giebel revealed that the firm had instigated a full review of all its contractors and is in the process of issuing its ten of its biggest partners with transparent payment plans that would be “completed and signed within the next two or three weeks”.

“Your contractors don’t want the money right now,” he claimed. “If you talk to these people, they are just asking for clarity or a payment plan. It’s most important to talk to these people and then commit to, and execute, a payment plan.”
[ArabianBusiness, by: Andrew White]

No love lost between Dubai World, bankers on deal talk

15. February. 2010

DUBAI - If Dubai was floating a trial balloon with a rumored debt offer proposing a scant 60 cents on the dollar, it may have to think again.

Stock markets tumbled and bankers turned glum following a report that Dubai World DBWLD.UL was mulling offering creditors two options, neither one reassuring to investors already spooked by Dubai's debt debacle.

According to the report, Dubai World will offer creditors either 60 percent repayment over seven years and a government guarantee, or full repayment with a debt for equity swap for property assets of Nakheel and no guarantee.

Neither option is palatable to bankers and the government was quick to distance itself from the report by Dow Jones.

"If anything is a surprise, it's in the figures," said a banker at a large international bank. "I thought they would have proposed a little better than 60 percent. This doesn't look promising."

Aside from the steep 40 percent haircut, creditors are unlikely to welcome getting assets in Nakheel NAKHD.UL, the developer behind man-made islands shaped like palms and a map of the world.

Nakheel had net tangible assets of 73.7 billion UAE dirhams ($20.07 billion) as of June 30, with properties under construction, including land, valued at 112.8 billion dirhams, according to Mac Capital Advisors.

"This gives an indication of what they're thinking -- they're considering some sort of discount," said one Gulf-based banker who asked not to be identified.

"It implies the government could have senior position, which the banks may not want to accept. And if it (the deal) doesn't guarantee interest payments, it's not a great deal for the banks."

The government reiterated last week that financial aid to Dubai World, through the Dubai Financial Support Fund (DFSF), was being delivered on commercial terms.

IN DENIAL

Dubai World rocked global markets in November with plans to request a delay on repaying $26 billion in debt linked to its main property units Nakheel and Limitless World. It staved off default on a $4.1 billion Islamic bond linked to Nakheel, after a last minute bailout from Abu Dhabi.

Criticized for its lack of transparency, Dubai said on Sunday it had made no formal restructuring proposals and nothing was expected until March or April.

"Although today's restructuring rumors have been denied by Dubai authorities, the risk of a deep haircut and extension of maturities still remains high -- given the combined solvency and liquidity problems facing Dubai World and a number of its subsidiaries, including Nakheel," said Goldman Sachs in a note to clients.

Dubai's main index .DFMGI fell to its lowest level in three weeks on Sunday in response to the news report, closing 3.5 percent lower.

"The stock market's reaction (today) reflects how bankers have interpreted this," said a senior Abu Dhabi based banker, adding that no official announcement has been made to the bank's representatives at creditor meetings with Dubai World.

The company is negotiating with an informal bank coordinating committee and has yet to make a formal proposal on how it plans to repay some $22 billion in debt.

The conglomerate is relying on the goodwill -- and self-interest -- of creditors to patiently wait for such details on how it plans to meet its obligations.

"It's a double-edged sword -- how much can Dubai World push down on UAE banks that hold this debt?" said Ali Khan, managing director and head of brokerage at Arqaam Capital.

"This will have wider implications, given the bank sector's weight on the stock market."

On Friday, the cost of insuring Dubai's debt soared to 2-1/2 month highs and bond yields rose as growing uncertainty over the fate of the debt-laden conglomerate World sent investors scrambling to hedge their exposure.

"I think it's for real, just gently priming the market," said an Asia-based banker at a major international bank.

"Tomorrow will be very interesting, when London and the U.S. are in."
[Reuters]

Dubai CDS jump, bonds selloff on debt uncertainty

12. February. 2010

LONDON - Dubai debt insurance costs surged to 2-1/2 month highs on Friday and bond yields rose as growing uncertainty over the fate of the debt-laden conglomerate Dubai World sent investors scrambling to hedge their exposure.

The five-year 2014 bond issued last November XS0463422088=R by the Dubai Department of Finance -- the emirate's finance ministry -- sold off heavily, falling 2 points to a record low 86.5. The yield rose half a percent to about 10 percent according to Reuters data.

"Dubai cash bonds are selling off massively. The 2014s have fallen to the 80s because of all kinds of rumours, none of them substantiated," a bond trader in London said.

Dubai credit default swaps traded as high as 660 basis points at one stage but CMA DataVision said they were quoted around 640 bps by 1515 GMT

That is the highest level since November when Dubai asked creditors for a standstill on some $22 billion of state-run Dubai World's debt.

A CDS broker said demand for protection on Dubai was the heaviest in many weeks.

Dubai debt insurance costs have been on the rise in recent sessions, and have jumped close to 150 bps since the start of February due to continued lack of clarity on the restructuring.

A $10 billion bailout by wealthy neighbour Abu Dhabi had allowed Dubai to make a December coupon payment but a maturing 2011 bond AE033512210=, owed by Dubai World's real estate subsidiary, Nakheel is one of the focal points.

The bond is down 1.5 points on Friday.

A banker familiar with Dubai debt told Reuters markets have also generally been jittery following the publication of an article in al-Ittihad newspaper quoted sources as saying Dubai World would ask creditors for a six-month debt standstill.

Effective from end-February that would cover $980 million payment of a Nakheel floating rate note due in May.

"Generally people are in panic mode over Dubai now and the global risk appetite situation is not helping - Dubai is seen as the weak link," the banker said. "Before the article, people had been hoping they would pay the bond."

Dubai World has declined to comment.

Analysts said attention is also focusing on $1.2 billion syndicated Islamic loan coming due end-March by Dubai World subsidiary Limitless -- identified earlier as one of the firms whose debt is subject to restructuring.

Banking sources told Reuters earlier this week that the Limitless loan-- syndicated by 18 banks from the Middle east, Asia and Europe -- would be rolled over.

"If they don't pay up it will be the first time a Dubai World entity will default so it is a kind of test," one source said.
[Reuters]

Economy briefs: DIB announces AED1.2bn profit & others..

12. February. 2010

DUBAI: Dubai Islamic Bank (DIB) announced on Thursday its financial results for the 12 months ending Dec. 31, 2009, demonstrating the bank’s resilience in the face of challenging global conditions, which continue to impact the performance of financial services firms worldwide. For the full year 2009, DIB reported a net profit of AED1.2 billion.

Emaar swings to Q4 profit

DUBAI: Dubai’s Emaar Properties said on Thursday it would focus on developing middle income housing in emerging markets in 2010 after returning to profit in the fourth quarter, but missing most analysts’ forecasts. Net profit in the three months to Dec. 31 was 720 million dirhams ($196.1 million) compared to a loss of 2.4 billion dirhams in the fourth quarter of 2008, it said in a statement.

S&P puts GFH on ‘selective default’

MANAMA: Standard & Poor’s has lowered Bahrain-based Gulf Finance House (GFH) to a selective default (SD/SD) on partial debt extension. GFH announced on Wednesday that it had got extension in its debt upon the maturity of $100 million of its $300 million syndicated loan for six months. “Because we consider the partial debt maturity extension a ‘distressed exchange’, we are downgrading GFH to selective default from CC/C,” Standard & Poor’s Ratings Services said in a statement.

Oman sees no bonds in 2010

MUSCAT: Oman has no plans to issue government bonds this year and banks remain liquid despite the impact of the global financial crisis, the Gulf country’s central bank head said on Thursday. The global economic downturn slashed growth rates and froze credit in the world’s top oil exporting region last year, forcing governments to embark on massive fiscal spending. “There is no plan to issue government bonds in 2010,” Central Bank of Oman Executive President Hamood Sangour Al-Zadjali told Reuters in a brief telephone interview.

Volkswagen recalls 193,000 vehicles

WASHINGTON: German carmaker Volkswagen announced Thursday a recall of more than 193,000 vehicles in Brazil for malfunctions in the rear wheels of its Novo Gol and Voyage models. The company said it had determined the component had not been sufficiently lubricated, which could cause the rear wheels to seize up or even fall off.

Credit Suisse posts $6.3bn profit

GENEVA: Switzerland’s banking giant Credit Suisse reported Thursday 2009 net profits of 6.7 billion francs ($6.3 billion) — but also unveiled lower-than-expected fourth quarter results. Profit for the final quarter of last year stood at 800 million francs.
[arab news]

History risen, the challenges of building the world's tallest tower

11. February. 2010

Emaar chairman Mohamed Alabbar reveals the challenges of building the world's tallest tower - and how it has changed him as a person.

We are standing on the balcony of Mohamed Alabbar's private office, admiring the world's tallest building a few yards in front of us. The chairman of Emaar is putting the final touches to its grand inauguration, just a few hours away. And as always with Alabbar, nothing is being left to chance.

"Sheikh Mohammed is my boss, and I want him to look at it and smile and say well done. And I want my people in the city to say; ‘Yeah, yeah, that's ok.' Because this building is theirs, it's not ours anymore," he says.
 
The chances are Alabbar will get more than a few pats on the back from his boss, not to mention millions around the globe. Barely six years since breaking ground, the Burj Dubai is a reality. It is here, it is real. Alabbar has - once again - delivered.
 
For Alabbar more than most, it is has been a rollercoaster ride of emotions. Eighteen months ago, speculators queued through the night outside the very building we are standing in, desperate to get a slice of the property pie as Dubai's boom looked unstoppable.

But then came Lehmann Brothers. Then came the crash. Then came the recession. And then came the Dubai debt crisis.

As the new decade begins, both the Burj Dubai and Alabbar are still standing - and like the original plans for the tower, which were far less grand, Alabbar has undergone a transformation.

"Am I a different kind of leader now? Without a doubt. I got better in many things along the way. I'm sure I made valuable mistakes, but I am becoming more emotional. I don't know if it's age or what. Or so much beating by the shareholders," he says wryly.

So is this a new softer Alabbar we are seeing? No, not quite.

"I'm a harder leader now, you know," he admits. "I mean, I'm a hard leader anyway...On the boss side, I am much tougher. Some people who got a job from me four years ago wouldn't get it today. It's [been] proven that so many people don't actually work. Productivity of people is pretty bad. In those market conditions [before the crash], everyone was employed and spoilt. So I laid off a little bit, and then discovered there are mistakes - so now I am back in the same style."

Alabbar is known for his proactive leadership style and attention to detail. Some of his critics have rounded on this in the past, but the Emaar chairman says that if anything, the recent financial crisis has shown that his way is the right way.

"I am trying to learn," he says. "In times like this you need to relearn. I think I thought ‘I'm conservative in my business policies'; but maybe I need to revisit that. My management style is hands-on and a lot of people criticise that. I think they have been proven wrong. I believe that hands-on is the only way to go."

He leans forward. "But I've learnt a lot. I've done a lot of good things that I should do more of and I should avoid a few things as well."

Few would argue that the Burj Dubai is one of the "good things." Emaar's fact sheet on the tower is several pages long, but the words ‘record breaking' appear in almost every paragraph. From the tallest building to the amount of concrete used; from speed of construction to the speed of the lifts - you name it; the Burj Dubai has broken it.

Alabbar is rightly proud of the achievement, but says a lot of the credit belongs to his "boss", the Ruler of Dubai Sheikh Mohammed Bin Rashid Al Maktoum.

"He is a tough boss but a fair boss, and a great boss when you make a mistake," he smiles. "He is there behind you like a mountain. You push hard and then you make a mistake, but His Highness will pick you up, and I love him for that.

"I have learned a lot from him - especially optimism and that you never go down," he continues. "He pushes more than you think. This [the Burj Dubai] would have not happened without him, it would have been an 80-storey building. I assure you, that is where my vision gets - 80, 90 that's about it."

Alabbar pauses. "He'll take you for a 5km walk in the desert. He just calls you and says; ‘Let's walk. Never mind if you don't have the right shoes, let's walk.' In that 5km you learn so much. Some people don't get it even when he explains it, but I grasped a lot from him. He gave me the chance to become a recognisable person in society and that is so special."
[ArabianBusiness] by: Anil Bhoyrul.

Dubai Islamic full-year net falls as impairments rise

11. February. 2010

Dubai Islamic Bank, the UAE’ biggest Islamic lender, said full-year profit declined as it set aside more money for bad loans.

Net income was AED1.2bn ($327m), the bank said in a statement to the Dubai bourse today. Dubai Islamic posted a profit of AED1.73bn a year earlier, according to Bloomberg data.

“This decline is primarily due to the conservative and prudent approach adopted by the bank” of enhancing impairment provisions, which rose 57 percent to 818 million dirhams, the statement said.
 
Fourth-quarter profit increased to 79.1 million dirhams from 1.44 million dirhams in the year-earlier period. Bloomberg calculated profit for the period by subtracting nine-month earnings from full-year income. The shares jumped as much as 12 percent to 2.6 dirhams, the most in almost two months.
 
The stock closed at 2.44 dirhams.

UAE banks are suffering after the financial crisis slowed lending, hurt investment-banking Emirates NBD, the U.A.E.’s biggest bank, said today it more than doubled provisions for bad loans as it posted a 9 percent drop in full-year income. Profit at National Bank of Abu Dhabi, the country’s second-biggest bank, fell 13 percent in the last quarter of 2009, while losses widened at Abu Dhabi Commercial Bank, because of loan provisions.

Local lenders are also being hurt by Dubai’s debt crisis and concern they may have to take additional provisions against potential losses as the second-largest sheikhdom in the U.A.E. seeks to renegotiate repayment terms on borrowings.

Dubai Islamic proposed a 20 percent cash dividend for 2009, according to the statement.
[Bloomberg]

Emaar posts Q4 profit

11. February. 2010

Emaar, the UAE’s largest real estate developer, was able to beat Q4 estimates as revenues from its malls and hotels business grew.

The builder of the world’s tallest skyscraper in Dubai, reported a fourth quarter profit of $196m. The loss in the year earlier period was AED2.43bn ($662m), Emaar said in a statement to the Dubai bourse today.

The developer, which opened the 200-story Burj Khalifa in January, is focusing on overseas operations after property prices in its home market fell by more than 50 percent. Indian joint venture Emaar MGF Land Ltd. plans to raise 38.5 billion rupees ($800 million) in an initial share offering, Emaar Chairman Mohammed Alabbar said in November.
 
Earnings probably improved on “significant delivery of units in Dubai Marina and Downtown and improving return from Emaar’s Malls and hotels,” Shuaa Capital analyst Roy Cherry said in a phone interview before earnings were released.
 
Emaar handed over keys to 3,100 units last year compared with 4,900 units in 2008, according to the statement.

The developer typically receives installments from buyers as properties are built and gets a final payment on delivery. About 35 percent of revenue from Burj Khalifa will be included in this year’s results as the building’s units are handed over, Alabbar said. Buyers in the tower have paid off about 85 percent of their units’ value, the chairman said in January.

Emaar may need to refinance about 4 billion dirhams of loans in the next 12 months, Chet Riley, a Dubai-based analyst at Nomura Holdings said.

Revenue from Burj Khalifa, combined with income from its investments in malls and other properties, will help the liquidity, he said.

The company, 31 percent owned by Dubai’s government, in December abandoned a planned merger with three real-estate units of Dubai Holding, saying it wouldn’t be economically viable.
[ArabianBusiness]

Tight credit, Dubai woes may curb Gulf growth - banker

10. February. 2010
ArabianBusiness (by: Nicolas Parasie)

The Gulf region's economic recovery risks being hampered as lending remains tight and state conglomerate Dubai World struggles to resolve its debt problems, a senior investment banker said.

Dubai, one of the seven sheikhdoms that make up the UAE, spooked global markets in November by announcing it would seek a payment standstill for $26bn of debts at conglomerate Dubai World.

Talks between the state-owned firm and its creditor banks are still ongoing, with updates on progress rare. Dubai's stock DFM exchange in January alone fell nearly 15 percent, with analysts citing uncertainty about the restructuring as one of the main reasons.

"All eyes will be on Dubai World, markets are hoping that the restructuring of Dubai World's (remaining) 22 billion (dollars) debt will be speedy ... the risk is that this exercise would be lengthy and could lead to many surprises in the month ahead," Henry Azzam, chief executive of Deutsche Bank's Middle East and North Africa division, told a conference on securities in the Gulf.
Most Gulf Arab states are expected to recover in 2010, after the global financial crisis froze credit in the world's top oil exporting region last year.

Qatar and Saudi Arabia are expected to outperform their neighbours with gross domestic product (GDP) growth estimated at around 16 percent and 3.8 percent respectively, while the UAE is seen lagging with around 2.5 percent growth, according to analysts polled by Reuters in January.

The region's overall recovery, however, is at risk from several factors.

The regional banking sector already took a hit in 2009 when the era of cheap borrowing costs abruptly came to an end and the domestic real estate sector fell sharply. Mortgage defaults and non-performing loans are likely to rise further and banks will be keeping a tight lid on lending.

"2010 is likely to be tough year for banks with non-performing loans to peak in the next two quarters ... the risk is that banks with the uncertainties in the local, regional and international markets ... will maintain the conservative lending policy and this could impact our growth scenario," Azzam said.

Other risks for the economic recovery include a volatile oil price, regional instability in countries such as Yemen, Iran and Iraq, lack of transparency and "inadequate" corporate governance, Azzam said.

Dubai World seeks $22bn debt freeze this month

10. February. 2010
ArabianBusiness (by: Tamara Walid)

State-linked indebted conglomerate Dubai World intends to ask creditors for a six-month standstill on $22 billion in debt this month, until it completes restructuring, an Arabic-language daily said on Wednesday.

According to a report published in the Al Ittihad newspaper, Dubai World will request a debt freeze from the end of February, which would cover a bond repayment of $980 million from property unit Nakheel.

A spokesman for Dubai World said the company has not released a statement on a standstill and declined to comment further.
 
Dubai World rocked global markets last year after it said it would request a standstill on billions in debt repayments at its two property units, Nakheel - developer of the emirate's palm-shaped islands - and Limitless World.

"This important step by Dubai World this month will represent the most significant transitional phase in the group's negotiations with creditors," sources told the paper.

A last minute intervention from neighbour Abu Dhabi staved off a default on a major Nakheel bond payment on Dec. 14 , but further financial help is conditional upon a standstill agreement.

Dubai World has access to about $4.9 billion remaining of the funds provided by Abu Dhabi, and the financial support will cover working capital and interest expenses, while a restructuring plan is hammered out.

A meeting was held between Dubai World and some 97 creditor banks on Dec. 21 - bankers said at the time the firm may ask for a standstill in January.

A $1.2 billion Islamic loan at Limitless is due for maturity in March, the next major loooming repayment, which Dubai World may seek to roll over, but it is unclear whether banks will agree without a standstill agreement in place.

An unofficial coordinating committee of seven creditor banks is negotiating between lenders and Dubai World.

Dubai still top FDI destination

8. February. 2010
ArabianBusiness

A new report -last week- has concluded that Dubai remains the most attractive city in the Middle East for Foreign Direct Investment (FDI), despite the recent speculation over the emirate’s ability to pay its debts.

According to management consulting firm AT Kearney, its recent FDI Confidence Index ranked the UAE as the 11th preferred FDI country destination globally, supported by the city rankings of Dubai, which came first in the region, and Abu Dhabi, which was in second place.

The Index is constructed using primary data from a proprietary survey administered between October and December 2009 to senior executives of the world’s leading corporations. The respondents were selected from the Global 1,000 population as determined by 2009 revenues, and the largest corporations in emerging economies.

“This survey addressed leading international investors’ plans and their concerns in the context of today’s global issues and analyzed their key criteria for selecting future investment destinations,” said Dr Dirk Buchta, vice president and managing director of AT Kearney Middle East. “These results indicated that Dubai is considered a regional success and investors rank it as their number one investment location in the Middle East.”
 
In the study, global investors pointed to Dubai’s unique location, infrastructure and value proposition as a hub to access the regional market. In addition the city scored highly in the ‘ease of doing business’ category.

Being ranked amongst the top 25 FDI destinations identified in the report means potential access to approximately 70 percent of the global FDI inflows.

“The high FDI confidence ranking of Dubai indicates that the emirate is seen as one of the prime access points and gateway for FDI into the Middle East and beyond,” said Matthieu De Clercq, senior manager at AT Kearney Middle East.

Despite recent events surrounding the global financial crisis, the survey found that the vast majority of investors have no plans to reduce their investments in the city. More than 80 percent of all investors surveyed, which have or have planned investments in Dubai, either plan to maintain the current level of investment or further increase their investment levels in the next three years.

Investors with regional experience did point to several challenges for further FDI growth in Dubai, including cross-cultural challenges, corporate governance, transparency and availability of business data.

“Dubai is regarded a catalyst for the region and while there are still opportunities to excel, the study’s results are significant and indicate that Dubai is the destination of choice for regional FDI and has the strength and talent to rebound against the international economic downturn,” added Dr Buchta.

'Dubai determined to repair reputation'

8. February. 2010
Bloomberg

Dubai wants to repair the damage to its reputation after it roiled world markets with a request to delay debt payments late last year, said Nick Anstee, the 682nd lord mayor of the City of London.

In an interview after meeting government officials in Dubai today, Anstee said: “They are absolutely determined to mitigate that reputational damage by arriving at a solution because they want to continue to deal and trade with people who have been part of building Dubai to what it’s today.”

Dubai World announced Dec 1 it was seeking to alter terms on about $26 billion of debt. Property unit Nakheel PJSC, which is building palm tree shaped islands off the emirate’s coast, paid back $4.1 billion on Dec 14 for a maturing Islamic bond after Abu Dhabi bailed out Dubai.

Dubai World has so far failed to present a restructuring offer to lenders and declined to say when a deal could be struck.

While officials in Dubai’s government “were not putting a timetable, there is however a great sense of urgency on bringing this matter to a positive resolution,” said Anstee, who is the elected leader of the City of London, the UK capital’s financial district.

Anstee didn’t name any of the banks he discussed with Dubai’s government.

Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc are among UK based lenders that operate in Dubai.

Dubai's Istithmar puts Inchcape on sale for $700 mln

4. February. 2010
Reuters

Dubai World's investment arm Istithmar has put port and shipping agent Inchcape Shipping Services up for sale for $600 million to $700 million and has attracted interest from private equity groups, the Financial Times reported on Wednesday.

The report said Advent International, Cinven [CINV.UL], Charterhouse Capital Partners [CHCAP.UL], Montagu Private Equity, TPG Capital [TPG.UL] and Kohlberg Kravis Roberts & Co [KKR.UL] were all working on bids potential bids for London-based Inchcape, which is one of the world's biggest marine management firms with some 200 offices globally.

Dubai World [DBWLD.UL] is seeking to offload assets as part of a restructuring plan after the state-owned conglomerate rocked global markets last November when it said it would request a delay on paying $26 billion in debt linked to its main property units.

Istithmar bought Inchcape for $285 million in 2006 from London-based private equity fund Electra Investment Trust.

Dubai debt insurance costs rise on Dubai World doubts

4. February. 2010
Reuters

Uncertainty about state-owned Dubai World's $22 billion debt restructuring is starting to weigh on the credit again, pushing up bond yields and Dubai's debt insurance costs, just six weeks after a multi-billion dollar bailout by neighbouring Abu Dhabi.

Dubai World stunned markets when it announced a debt payment standstill at the end of November. A $10 billion bail-out by Abu Dhabi has allowed the company to continue to make debt payments, but it has yet to reach a formal standstill agreement with creditors.

Five-year credit default swaps (CDS) for Dubai have risen sharply in the past week and are now quoted at 510 basis points, up about 45 bps on the week, meaning it costs over half a million dollars a year to insure $10 million of the emirate's debt for a five-year period.

"Since the Dubai World statement which came out of the blue, we have not had any sort of clarity as to how the talks are progressing, we have not had any statements or any proposals," said Nish Popat, head of fixed income at ING Investment Management Middle East in Dubai.

"We are hearing they are still talking to the banks, but it's been two months and there is still this uncertainty and lack of clarity."

The CDS surge back to levels seen just before the mid-December bailout is fuelling a rise in debt insurance costs, albeit on a smaller scale, for other regional corporates and names such as Abu Dhabi and Bahrain, according to prices from CDS monitor CMA DataVision.

Analysts say the rise comes against the backdrop of wobbly global equity markets and the debt crisis in Greece and other euro zone peripherals.

But they said a recent move by Standard & Poor's to withdraw its rating for Dubai Holding Commercial Group (DHCOG), owned by the emirate's ruler, had hit sentiment for the region.

"We don't think headlines will go back to the emergency mode in the coming quarters but clearly people are cautious because there is some danger of debt rescheduling," said Luis Costa, emerging debt strategist at Commerzbank.

"The $10 billion package from Abu Dhabi means Dubai World can plug refinancing for 2010, but huge chunks of refinancing remain still for 2011."

Dubai World subsidiary Nakheel has a domestic bond which matures on May 13, a focus of attention for investors. XS0361130148= Dubai World subsidiary Nakheel's $750 million sukuk due Jan 2011 is trading at 55 AE033512210=, giving a yield of 79 percent.

The yield has risen sharply in the past few weeks, but analysts say it may have further to go.

"The market is assigning too high recovery valuations to Nakheel," said Milena Ianeva, strategist at Barclays Capital.

"The Nakheel 11s trading 56-57 and Nakheel 10s at 63-68 are still well above our estimated recovery value of 40-50."

Concern about Dubai World is also hitting other Dubai corporates such as Dubai Holding.

Dubai Holding's $500 million bond due 2012 is trading at 65, giving a yield of 23 percent, compared with an 18 percent yield in mid-Jan. KY028530412=

However, Costa forecast $10 billion in net international bond issuance in the region this year, with issuers such as Bahrain and Abu Dhabi expected to tap capital markets.

Bahrain plans to issue a $1 billion 10-year sovereign bond, which will also be available for sale in the U.S., the central bank said last month.

Dubai discovers new martime oil field - statement

4. February. 2010
Reuters

A new maritime oil field has been discovered in the emirate of Dubai, the office of the Gulf Arab emirate's ruler said on Thursday.

"Mohammed bin Rashid brings the good news to the people of the Emirates and announces the discovery of a new marine oil field in Dubai," according to a statement issued from the Dubai media office.

No details were given about the size or production capability of the new field in the statement.

Al Bayan newspaper reported industry sources as saying that the field was "promising".

The UAE is a seven-member federation including the Gulf trade and tourism hub of Dubai. Over 90 percent of the UAE's oil is located in the country's capital Abu Dhabi.

Dubai World asset sale nears, (Scenarios)

3. February. 2010
Reuters

State-owned conglomerate Dubai World, which is restructuring some $22 billion in debt repayments, has yet to arrive at a formal standstill agreement with its creditors.

The company rocked global markets on November 25 with plans to request a delay on repaying $26 billion in debt linked to its main property units Nakheel and Limitless World.

Dubai World -- which staved off default on a $4.1 billion Islamic bond linked to Nakheel after a last-minute bailout from Abu Dhabi -- is working on a more specific restructuring plan, having already initiated moves to downsize at Group level.

In June last year, Dubai World hired AlixPartners, turnaround experts advising on General Motors' bankruptcy, to help restructure the group. The firm said in October it had cut 12,000 jobs, or 15 percent of its global workforce.

Here are some key scenarios which could unfold in the coming days and weeks.
 DE FACTO STANDSTILL

A formal standstill agreement with Dubai World's 97 creditors may never materialize as long as the conglomerate keeps servicing interest payments and presents a concise restructuring plan by the end of April.

The biggest looming deadline is May 13, 2010 -- the maturity date for a $980 million Nakheel Islamic bond, or sukuk.

An unofficial coordinating committee of seven banks, believed to carry the most exposure, is in negotiations with the company on a regular basis but progress has been slow partly due to the complexity of the situation.

Although Dubai World did not publicly state a timeframe for requesting a standstill from creditor banks, a December meeting with lenders suggested something would be forthcoming in January.

Any possible standstill request is expected to ask creditors to delay bond and loan repayments for a specified period while Dubai World comes up with a detailed plan for restructuring its debt pile, initially expected by the end of April.

However, the addition of Bank of Tokyo-Mitsubishi to the informal creditors committee in January -- the seventh bank to join -- is one of the reasons for a delay.

The lack of information provided to guide investors has also contributed to the unease, bankers say.

"Dubai World is a complete black box and mystery," said a Gulf-based banker at a major international bank. "It doesn't appear there's been any progress."

ASSET SALES

Dubai World will need to offload assets to help meet pending debt obligations. The company has already ring-fenced prized possessions such as DP World and luxury hotelier Jumeirah Group.

The first asset to hit the auction block will likely be Inchcape Shipping Services (ISS), one of the world's biggest marine management firms, which was already been prepared for sale prior to the November 25 announcement.

Dubai World's private equity arm Istithmar World bought the company for $285 million in 2006 from London-based private equity fund, Electra Investment Trust.

A private equity firm is the most likely buyer for the unit, which has some 200 offices globally.

Istithmar World is among the units Dubai World has said will not be part of the restructuring.

"From Duba World's standpoint, they've got debt obligations coming due over the coming years and they've got to sell assets to meet them," said Khuram Maqsood, managing director of Emirates Capital.
 "I think they're keen on finding cash wherever they can."

Other possible sales could include units from Dubai World's troubled property subsidiaries Nakheel and Limitless.

Some of the high profile international assets held by Istithmar World could also go, following on from the sale at auction of W Hotel in Manhattan and two buildings owned by Istithmar in London in late 2009.

Istithmar World bought U.S. luxury retail chain Barneys for $942 million in 2007. Barneys hired restructuring advisory firm Perella Weinberg last August to help it mull options that would shore up its financial position.

The move came amid speculation Istithmar is freezing investments as part of a restructuring that may result in its sale or a sale of assets.

ROGUE BANK

Dubai World is relying on the goodwill -- and self-interest -- of creditors to patiently wait for a proposal on how it plans to meet its obligations.

However, if one bank steps out of line and issues a notice of default, the entire restructuring process would be thrown into peril. Any so-called rogue bank would be taking a risk by invoking default since this would risk tipping Dubai World into bankruptcy under a tribunal formed late last year.

In December, Dubai enacted a bankruptcy law it modeled on U.K. and U.S. law and said it will set up the tribunal to hear any cases submitted against Dubai World.

The creation of the tribunal -- based at the Dubai International Financial Center, the emirate's primary hub for foreign banks and financial firms -- was a bargaining chip as Dubai World readied to sit down with creditors over the planned restructuring.

Few analysts expected it would be needed at all, especially as the tribunal's decisions have no recourse for appeal.

RESTRUCTURING AGREEMENT

Dubai World's plan, parts of which it would make available to creditors, is not expected to be ready before the end of February. As part of the process, advisors are identifying which businesses are viable and which assets can go on the block.

"The longer they wait to communicate to the market, the more likely the number of pessimists will outnumber everyone else," said another Gulf-based banker.

The plan entails controlling spending as a first step , developing a detailed business plan for every Dubai World unit -- over 180 businesses -- and presenting it to the banks.

There will be details on the payment arrangements with creditors, including a timeline. Options for repayment include extension of maturities, writedowns and debt for equity swaps.

Once the business plan is readied, Dubai World chief restructuring officer Aidan Birkett, from Deloitte, signs off on it and it goes to the Supreme Fiscal Committee and then to the creditor coordinating committee and its advisor, KPMG.

That committee consists of Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland, as well as UAE banks Emirates NBD and Abu Dhabi Commercial Bank and Japan's Bank of Tokyo-Mitsubishi bank, a unit of Mitsubishi UFJ Financial Group.

Dubai debt crisis to hit global sukuk sales - poll

30. January. 2010
ArabianBusiness


Global sukuk issuance will be weaker than expected this year, with some analysts seeing a drop of as much as a fifth from 2009, as Dubai's debt crisis and an expected rise in borrowing costs weigh on sentiment, a Reuters poll showed on Tuesday.

The majority of 12 Islamic bankers and industry experts surveyed expect issuance to range between $15-$17 billion in 2010, down from a similar poll in October which estimated over $20 billion in sales this year.

Global sukuk issuance totalled $19 billion last year, of which the UAE accounted for a fifth, according to Thomson Reuters data.

By comparison, global emerging market issuance totaled close to $200 billion last year, according to Commerzbank, and is likely to match that this year as investors look for more conventional, higher-yielding assets again.

Government borrowing needs and infrastructure funding would drive sukuk sales this year, even if uncertainties over the strength of a global economic recovery and fears of more sukuk defaults dampen the overall market, the poll showed.

"The debt crisis of Dubai World, which became a major issue in the sukuk market in the fourth quarter of 2009, is expected to bring down the issuance size from this region on negative investors' perceptions," said Malaysian Rating Corp vice-president Wan Murezani Wan Mohamad.

"Nevertheless, Dubai World's credit challenges are mostly country-specific and borrower-specific, and as such, should have no demand and ratings implications for sukuk universe in other region."

Sukuk's reputation as a safe haven investment took a hit after Dubai real estate developer Nakheel, issuer of the world's largest Islamic bond, became part of a debt restructuring at some Dubai state-owned companies.

Nakheel said last week it had made a $10.3 million coupon payment on its $750 million bond due 2011.

It has two bonds outstanding -- a 3.6 billion dirham issue maturing on May 13 and the $750 million deal due January 2011.
Ratings agencies downgraded several Dubai-related entities after it became apparent their debt would not be backed by the government as previously assumed.

Bankers also expect issuance to be affected by an expected rise in interest rates as the global economy recovers, which would increase borrowing costs. Islamic bonds are often priced using the conventional LIBOR (London Interbank Offered Rate) as there is no benchmark Islamic rate.

But the return of more normal credit market activity in the Gulf, the need for Islamic financial institutions to refinance and the willingness of governments to increase issuance would support the market, said Simon Eedle, Calyon's Islamic banking global head.

Governments and state-linked firms as well as infrastructure and financial companies are expected to be the largest issuers, with the bulk of paper coming from Malaysia and the Middle East, the poll showed.

Many governments are still intent on maintaining growth-boosting stimulus spending until their economies get back on more solid footing.

The yield on the HSBC/DIFX US Dollar Sukuk Index fell 5.378 to 7.011 on Jan 22 from March last year compared with its Middle East Conventional US Dollar Bond Index, which was down 3.356 during that period.

Dubai no longer 'golden goose' for jobs

30. January. 2010
ArabianBusiness
Recruitment consultancy Kershaw Leonard has said that while Dubai will still appeal to job hunters in 2010, it was no longer the "golden goose" it once was.

Mike Hynes, managing partner at Kershaw Leonard, said he was seeing "a lot more" hiring activity in Abu Dhabi than Dubai, and a general willingness by job seekers in Dubai to commute or even relocate to the capital, provided accommodation can be found.

However, he added that the overall sentiment in Dubai remained upbeat.
 
"Generally there is more confidence, more activity, more things going on," Hynes said in comments published by website Ameinfo. "But people are still being cautious about recruiting and cautious about moving jobs."

Hynes said hiring and salary trends in Dubai varied depending on the industry, adding: "Nothing has really changed in the finance and human resources areas. They were not very badly hit in 2009, and continue to remain strong for us now."

But he said that in the construction sector, employers wanted to pay lower salaries, but employees wouldn't move for less money. "So it's a bit of a stalemate. People who have a job are hanging on to it," he said.

Kershaw Leonard also said that job candidates living in the emirate had a huge advantage over those living overseas.
"It's quite tough to get a position from anywhere outside of Dubai right now. For the most part, there are a lot people who have the experience and expertise for mainstream jobs. They are a much lower risk than bringing someone in from, say, the UK," Hynes said.

He added that Dubai was fortunate that it had so much talent already in the emirate, as the lure of the city among job seekers overseas had fallen.

"I think the image of Dubai has been badly tarnished, and it is no longer seen as the magnet that it once was. I do think that there will always be people who will be keen to come here, but it's not the golden goose anymore," he said.

Bassam Gazal, head of Mercer's survey practice in the Middle East, told Ameinfo that companies in Dubai could be under the most pressure to raise salaries in 2010 as competed with firms in Qatar, Saudi Arabia, and Abu Dhabi for the best candidates.

The mess of Dubai

14. January. 2010

by: Felix Salmon
Seeking Alpha

If you think that the Dubai situation has pretty much been resolved with that cash infusion from Abu Dhabi, think again. Paul Whitfield and Vipal Monga explain that nothing really has been cleared up at all, and that there are far more — and far bigger — uncertainties surrounding the emirate’s finances than most of us had suspected.

For one thing, Dubai has no real legal structure capable of dealing with a default on this level, which has forced it to hurriedly import a jury-rigged system with UK and Singaporean jurists, based on British and American (not Islamic) legal structures.
But it’s not clear how trustworthy the Dubai’s government — its ruling family — really is, given that they actively encouraged the idea that Dubai World had a sovereign guarantee.
And it’s also far from clear what has happened to the $10 billion received from Abu Dhabi in February, or, for that matter, another $5 billion that was lent to Dubai by two Abu Dhabi banks in November. As for the further $10 billion which arrived in December, we know that $4.1 billion of it was used to repay Dubai World’s sukuk. But the final destination of the remainder of the money is also opaque.
What’s more, no one has much of a handle on the total liabilities involved, either:
Dubai World has officially released a $59.3 billion debt figure as of the end of 2008, but that number isn’t taken at face value by financial experts.
Deutsche Bank AG, for example, says that the figure included more than just financial debt, including equity, and payments due to suppliers. Discounting the nonfinancial debt led the German bank to estimate Dubai World’s financial external debt at $24.27 billion.
Morgan Stanley has its own estimate of the liabilities, taking a disclosed $26.2 billion number from Dubai and then adding another 30% to that to account for a presumed undisclosed amount, putting Dubai World’s debt at a seemingly arbitrary $34.1 billion.
The upshot is that the restructuring is going to be messy and unpredictable: my guess is that it’ll be a highly political process which will drag on for years. As ever, the big winners are certain to be the lawyers.

16% Dubai export slump in 2009 same as China

13. January. 2010
by: Peter Cooper

New data published by the Dubai Chamber of Commerce and Industry showed total exports slumping 16 per cent to $50.5 billion in 2009, the same annual percentage fall recorded by China, the world’s largest exporter.
Dubai exports also witnessed a similar rebound in December with a 23 per cent gain to $5 billion as global trade bounced back from the worst slump in more than 80 years. The comparative figure of December 2008 was the bottom of the slump so the bounce is not really as good as it looks.
2010 optimism
DCCI director-general Hamad Bu Amin said: ‘The higher December export figures for Dubai are an indication of the positive outlook for 2010 as the export sector can look forward to a better trading year this time around’.
The geographic spread of Dubai exports remained heavily concentrated in its top 20 markets with Gulf Cooperation Council countries accounting for 45 per cent and Saudi Arabia the largest single national destination at 23 per cent.
The GCC region has not been as hard impacted by the global recession as the rest of thw world, aside from Dubai where a local real estate crash has exacerbated the downturn and left developers with huge debts. Indeed, oil prices have staged a remarkable recovery supporting public expenditure in the region.
However, it is far from certain whether the global economy is quite out of the woods just yet. The recent uptick in global trade could be the middle of a W-shaped recession that lands the world back in recession later this year.
Second-leg down?
Some economists believe the recovery thus far is almost entirely down to the massive and unprecedented actions by global governments to stimulate the world economy and offset the impact of the financial crisis surrounding bad debts at banks from the sub-prime lending crisis.
Once this stimulus is withdrawn – and it is too large to be maintained indefinitely – then there will inevitably be another contraction in global demand and downward pressure on trade flows. Dubai should be looking to this modest upturn to put right as much damage as possible from the recession of 2009 just in case more danger lurks around the corner.
The tightening of Chinese bank lending has just thrown a spanner in the works and halted the recent rise in global financial markets, and it may do the same for exports.