Gulf Business

Dubai’s Arqaam Capital launches specialist fixed income #funds in DIFC

Dubai-based investment bank Arqaam Capital has announced the launch of two specialist fixed income funds located within Dubai International Financial Centre (DIFC). The high income fund will invest in emerging markets with a focus on the MENA region and will include a mixture of fixed and floating rate investments. The Islamic fixed income fund will invest in sukuk issued by sovereigns, quasi-sovereigns and corporates. Arqaam Capital said the funds are denominated in US dollars and pegged currencies and will target annual returns of 6 and 7%. The new funds will be co-managed by Abdul Kadir Hussain, head of fixed income asset management, and Zeina Rizk, director of fixed income asset management.

#Qatari bank #merger will ‘rebalance’ the market – Moody’s

According to Moody’s Investors Service, a proposed merger between three Qatari banks would help “rebalance” the banking sector in the country. The merger is currently at due diligence stage and will be subject to approval by the relevant authorities. The merged entity between Masraf Al Rayan, Barwa Bank and International Bank of Qatar would create the largest Islamic bank and second largest lender in Qatar. Total assets would amount to around QAR173bn ($48bn) and the market share would be around 14%. Moody’s assistant vice president Nitish Bhojnagarwala said Islamic banking asset growth has outpaced conventional banking in Qatar, as demonstrated by a 21% compound annual growth rate of loans for Islamic banks between 2011 and 2016 compared with 14% for the conventional banks. The GCC is witnessing a consolidation in the banking sector, with the two largest lenders in Abu Dhabi also currently preparing to merge.

Lower liquidity not driving drop in #GCC #sukuk volumes

According to S&P Global Ratings, the lower liquidity level in the GCC is not the main reason for a drop in the region’s sukuk issuances in recent years. The volume of sukuk was muted last year, particularly compared with conventional bond issuance in GCC countries. S&P believes the complexity of structuring sukuk is the main reason behind muted sukuk issuance in 2016 and it will continue to weigh on volumes in 2017. S&P also estimates GCC sovereigns financing needs at around $275bn over the next three years, the majority of which pertains to Saudi Arabia. While sukuk comprise only a small amount of total outstanding issuance, various governments established the necessary legal frameworks for their issuance.

#Saudi Binladin seeks extension on SAR10bn Grand Mosque financing

Saudi Binladin Group (SBG) is negotiating with banks an extension of up to two years on a 10 billion riyal ($2.7 billion) Islamic credit facility used to pay for building work at the kingdom’s Grand Mosque in Mecca. Contractors in Saudi Arabia have had to deal with delays and late payment after the government trimmed spending to adjust to the impact of lower oil prices. Mecca’s mayor Osama bin Fadl Al-Bar told Reuters in September that the expansion would be completed in either 2017 or 2018. But the timeline for the mosque has now been delayed. SBG had received some of the backlog of payment owed to it by the government in recent months, but a large portion remains outstanding.

#Dubai’s Meydan raises Dhs 1bn Islamic financing

Dubai’s Meydan Group has obtained Dhs 1bn ($272m) of Islamic financing partly through an issue of Islamic bonds and partly from a term financing facility. The money will help to strengthen Meydan’s capital structure, diversify its investor base and support new projects. Despite the regional economic slowdown Dubai is continuing to invest heavily in its tourism and real estate industries. Abu Dhabi Islamic Bank coordinated and structured Meydan’s financing. Three other UAE banks – Al Hilal Bank, Sharjah Islamic Bank and Ajman Bank – were also involved.

#Kuwait’s Investment Dar seeks creditor backing for new $2.7bn debt plan

Kuwait’s Investment Dar has offered to hand assets to creditors immediately in order to win them over to its latest plan to restructure debts of KD 813m ($2.7bn). Investment Dar has had mixed success in restructuring its debts since getting into trouble during the financial crisis. Its latest attempt, called Al Sharq, promises to immediately hand over control of assets in the company to creditors, while also guaranteeing that shareholders will not get paid until all creditors are paid.

Emirates Islamic to lay off 200 people – report

Dubai-based lender Emirates Islamic is laying off 200 staff to cut costs, according to a report. An un-named source confirmed that the bank was downsizing its workforce. However, Emirates Islamic declined to deny or confirm the report. Several banks in the United Arab Emirates have trimmed local operations as they look to reduce costs. Barclays is reducing its Dubai workforce by 150 people and closing its offices in Emaar Square. Earlier this year, the National Bank of Ras Al Khaimah also revealed that it will cut expatriate staff as it seeks to reduce its headcount by up to 250. The overall banking industry across the GCC is slowing because of low oil prices.

Moody's downgrades Saudi banking system to negative

Saudi Arabia's banking sector is to feel the brunt of cheap oil and the resulting government spending cuts, according to a new report by Moody's. The credit rating agency has downgraded the banking industry from stable to negative as GDP growth is predicted to slow to just 1.5 per cent in 2016, more than half of the previous year. As a result, the agency has predicted loan growth to slow down to between 3 per cent and 5 per cent for 2016, down from from 8 per cent in 2015 and 12 per cent the year before. Asset risk is also expected to rise as a result of the deteriorating operating environment. Meanwhile, capital buffers are likely to remain solid with the sector's average tangible common equity (TCE) ratio remaining broadly stable.

Nakheel makes Dhs 220m sukuk profit payment

Dubai-based developer Nakheel confirmed that it made a profit payment of Dhs 220m on its trade creditor sukuk. The company said that it has instructed Deutsche Bank, the registrar and paying agent, to make the profit payment to all sukuk holders on the due date of December 15, 2015 against the sukuk issued amount of Dhs 4.4bn to date. Nakheel’s last profit payment on its Dhs 4.4bn sukuk was issued in June this year. The company posted a net profit of Dhs 3.61bn in the first nine months of 2015, up 39 per cent compared to Dhs 2.6bn in the same period last year. The developer has paid off debts worth Dhs 7.9bn and is continuing to make payments on its Dhs 4.4bn sukuk, which is due to mature in August 2016.

Saudi public spending slowdown will impact banks – Moody’s

The planned slowdown in public spending in Saudi Arabia will prove credit negative for banks in the kingdom, ratings agency Moody’s Investors Service has said in a new report. Following years of high expenditure, the Saudi government is planning to moderate the pace of spending due to the persistent drop in oil revenues. The International Monetary Fund estimates that Saudi will face a budget deficit of over $100bn this year, amounting to 21.6 per cent of gross domestic product. Moody’s anticipates that government spending growth will slow to 2 per cent in 2014 and 4 per cent in 2017, from 14 per cent on average between 2010 and 2014.

UAE bank ADIB has no further capital plans – CEO

Abu Dhabi Islamic Bank has no current plans to raise more capital after a rights issue last month, its chief executive Tirad al-Mahmoud said, adding that the lender would eschew expansion to focus on existing markets. The largest Islamic lender in the emirate raised Dhs 504m ($137m) in September. Mahmoud said the bank would grow by “mid-single-digits” in 2015 and its capital was sufficient for this level, though he did not say what growth he was referring to. ADIB posted a 10.5 per cent rise in net profit in the second quarter. ADIB had no plans to expand into new markets and would instead focus on where it has existing operations, he added.

Oman central bank sets up Islamic banking department

The Omani central bank has established an independent department to handle Islamic banking. The new department will handle all Islamic banking matters, though the existing examination and surveillance departments will continue their supervision of banks. The creation of a separate Islamic banking department appears to clear the way for two steps seen as critical to the long-term development of the industry: issuance of sovereign Islamic bonds, and the introduction of sharia-compliant money market tools. The government has said it plans to sell its first sukuk, an issue of OMR 200m ($520m), in coming months, while a central bank task force has been studying Islamic money market operations.

Social Entrepreneurs: unleashing creative destruction for social change

With more than 30 per cent of young Arabs unemployed, social entrepreneurship must be considered to reduce welfare costs in the region by empowering community members to solve social, economic and political issues that affect them. At a time where the MENA is seeing the drastic effects of political and economic instability, it has never been more pressing for people of the region to be encouraged to look towards new beginnings and the reconstruction of society. Despite coming from different backgrounds, social entrepreneurs all have stories that have influenced them to make transformative social changes that they hope will one day have a global impact.

Kuwait’s Investment Dar loses appeal against lifting of legal protection

Kuwait’s Investment Dar said on Sunday that a Kuwaiti court had rejected the company’s appeal against a ruling to lift protection it had against legal action by creditors. The company, which holds a stake in luxury carmaker Aston Martin, will be reviewing available options with its advisers over the next few days and would announce the result of these conversations in the coming period, it said in a statement. Investment Dar was one of the first to reorganise under Kuwait’s Financial Stability Law. A court ruling in July last year ruled that legal protection from creditors would be lifted, although it was temporarily reinstated in October to allow Investment Dar to appeal. However, a hearing by the Kuwaiti Court of Cassation on June 17 rejected the appeal, the statement said. The court’s decision was final, Investment Dar added.

Buyout firm Arcapita sells $640m US real estate portfolio

Bahrain-based Islamic investment firm Arcapita said on Wednesday it had sold its real estate portfolio of retirement communities across the United States to NorthStar Healthcare Income Trust for $640 million. The portfolio includes 16 facilities and 4,000 residential units for continuing senior care. Net operating income from the portfolio grew by 41 per cent between 2010 and 2014, despite a slump in the U.S. housing market following the 2008 financial crisis. Abdulmalik said the firm has given $3 billion in exit proceeds to its investors in the last two years but did not give a breakdown of profits for its real estate portfolio exit. In November, Arcapita completed a $100 million fundraising, a little over a year after emerging from Chapter 11 bankruptcy.

IMF Endorses Islamic Finance, Warns It Must Be Implemented Better

The International Monetary Fund has endorsed the principles of Islamic finance, saying it could prove safer than conventional finance, but the multilateral lender warned Islamic bankers that they must tighten rules and follow them more consistently. A report released by the IMF this week noted that because Islamic banking forbids pure monetary speculation and stresses that deals should be based on real economic activity, it could pose less risk than conventional banking to the stability of financial systems. However, the industry could fail to achieve its promise – and even have a destabilising effect – if it does not design its rules more carefully and implement them more consistently, the report added.

Saudi Bank Aljazira Names Advisers For $800m Rights Issue

Saudi Arabia’s Bank Aljazira has appointed the investment banking arms of Gulf International Bank and Riyad Bank to advise it on a SAR3 billion ($800 million) rights issue. The price and number of shares to be issued under the offering, which will be arranged by GIB Capital and Riyad Capital, is still pending approval from the relevant authorities and shareholders, the bank said in a bourse filing. The rights issue by one of the Kingdom’s smaller lenders by assets will be used to strengthen its capital base and finance its activities, the bank added.

Qatar’s Masraf Al Rayan Eyes Potential Debut Sukuk Issue -Sources

Qatar’s Masraf Al Rayan is eyeing a debut in the debt capital markets this year after inviting bankers to pitch for arranger roles on a potential U.S. dollar-denominated benchmark sukuk issue, sources said on Monday. The sharia-compliant institution is expected to raise funds before end-April. Masraf Al Rayan is “very close” to mandating arrangers for the upcoming sukuk issue, two sources said. Masraf Al Rayan joins a growing pipeline of potential Gulf issuance as borrowers want to obtain funds from the dollar debt markets before a possible increase in interest rates by the U.S. Federal Reserve later this year.

UAE's Sharjah Islamic Bank Prices $500m 5 Year Sukuk - Leads

Sharjah Islamic Bank (SIB) priced a $500 million sukuk of five years duration on Tuesday. The Islamic bond was priced at a spread of 110 basis points over midswaps and carried a profit rate of 2.843 per cent. The final spread was at the tight end of price guidance issued earlier in the day of 115 bps, plus or minus 5 bps, over the benchmark. The order book was worth around $3 billion. SIB’s sukuk was arranged by Noor Bank, Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Emirates NBD, HSBC, KFH Investment and Standard Chartered and was sold after a series of investor meetings in Asia and Europe.

Eiffel Management Buys Out DIB’s Stake In Emirates REIT

Dubai-based Emirates REIT announced that Eiffel Management has acquired a 25 per cent in the REIT manager that was previously held by Dubai Islamic Bank (DIB). The value of the transaction was not disclosed. The REIT Manager is responsible for running the property portfolio of Emirates REIT and all the operations concerning the REIT. It is incorporated in Dubai international Finance Centre and licensed by DFSA. Following the deal, Eiffel Management will own 100 per cent of REIT manager’s total issued share capital. Emirates REIT reported a net profit growth of 39 per cent to reach $48.5 million in 2014 from $34.8 million in 2013.

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