Saudi Arabia has sent a request for proposals (RFP) to banks for a planned U.S. dollar sukuk. The debt sale would be Saudi's second international bond offering, after the sovereign issued a debut $17.5 billion bond in October last year. Saudi Arabia is also expected to issue a conventional bond later this year. The kingdom's bond plans are part of its push towards a more diversified economy that is less reliant on oil exports. The RFP was issued at a busy time in the Gulf with other countries also planning to raise funds internationally to offset the impact of lower global oil prices. Bahrain launched a tap of its $1 billion 2028 bond on Tuesday, while Oman is expected to announce the launch of a new bond this week.
Dubai Islamic Bank became the first Gulf financial institution to print a sukuk this year as it priced a US$1bn 3.664% five-year issuance. The only other bank from the region to have issued this year is Gulf International Bank, which sold a conventional US$500m five-year last month. Proceeds will go towards refinancing a US$500m sukuk coming due in May, as well as a US$300m maturity for the subsidiary Tamweel. Middle East accounts took 61%, Europe 20%, and Asia 19%. By investor type, banks got 52%, asset managers 39%, agencies 3%, private banks 2% and insurers 2%. Lead arrangers include Bank ABC, DIB, Emirates NBD, HSBC, KFH, Maybank, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered.
The European Union on Thursday lifted sanctions on the Syria International Islamic Bank and businessman Sulieman Maarouf with ties to Syrian President Bashar al-Assad who lives in London. The moves came as part of a decision to extend the Syria sanctions on nearly all targets for another year, until June 1, 2015. A European diplomat said the decision to lift sanctions against the bank was taken because of a lack of strong evidence linking it to Mr. al-Assad's regime. The Syrian International Islamic bank was placed on the list because the EU alleged it facilitated transactions for the Commercial Bank of Syria and the Syrian Lebanese Commercial Bank. The list now includes 179 people and 53 entities that the EU says are "linked" to violent repression by Mr. al-Assad's regime.
In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, Arcapita's official committee of unsecured creditors said it wants to challenge three sets of claims that it says could unlock millions of dollars for creditors of the liquidating firm. The creditors think they can recover more than $33 million owed to Arcapita being held by three Bahrain banks and save Arcapita from $100 million in liabilities stemming from a 2011 transaction with its subsidiary Arcapita Investment Holdings that may have been insolvent. The creditors also think they can get $1.2 million more related to a "preference" claim, which typically refers to claims from the 90-day period before a company files for bankruptcy. In their filing, the creditors said they didn't think litigation would be overly expensive.
Tide Natural Gas Storage LP sued a former group of minority shareholders of Falcon Gas Storage Co., the bankrupt Arcapita subsidiary that sold natural-gas assets to Tide. The energy company says those shareholders' claims in Arcapita's bankruptcy shouldn't be paid before their own. The shareholders have been paid some of the money they were owed but are slated to receive an additional $8.25 million that lies in a $70 million account. The $70 million lies in an escrow account and stems from Tide's 2010 purchase of the natural-gas storage facilities from Falcon. Tide has been fighting for the money in U.S. District Court in Manhattan for two years. Arcapita has argued the $70 million claim by Tide should be subordinated to those of other creditors. The issue, Arcapita says, isn't whether the claim should be placed lower, but rather how much of it should be.
Goldman Sachs Group Inc. (GS), which is already providing Arcapita Bank $350 million in bankruptcy exit financing, is now seeking to give the Bahrain investment firm a $175 million bankruptcy loan that would pay off existing lender Fortress Investment Group LLC (FIG). Arcapita said the Goldman loan would pay off the $105 million still owed to Fortress and later convert into the $350 million exit loan that Goldman is already providing. With Arcapita obliged to pay off the Fortress loan by June 14, the company said it needs the Goldman loan approved at a hearing on June 10. Goldman, earlier this month, beat out Fortress in a war over who would provide the exit financing for Arcapita. Fortress's $150 million financing pact, arranged in December for Arcapita, was believed to be the first U.S. bankruptcy loan fully compliant with Islamic Sharia law.
Bahrain investment firm Arcapita Bank has time until Dec. 14 to submit a reorganization plan without the threat of rival proposals. The company shall not seek any further extensions after that date. The extension was approved by judge Sean H. Lane of U.S. Bankruptcy Court in Manhattan. The decision was made possible by the satisfaction of an objection from Arcapita's official committee of unsecured creditors. Arcapita considers a standalone plan as well as a plan involving new money from a third party.
Fitch Ratings released that the recent announcement of a USD 20 bn bond programme is improving the overall liquidity which will be positive for government-linked corporates facing the need to refinance maturing debt at a time when the impact of regional economic conditions, especially in the construction and property sector, are becoming increasingly negative.
Official figures put Dubai government and state-owned corporate debt at USD80 bn, of which Fitch estimates that around USD11 bn of foreign currency debt matures during 2009. Last week Borse Dubai raised USD2.5 bn in financing, and received an equity injection of USD1 bn from its shareholder, Investment Corporation of Dubai, to refinance an aggregate USD3.8 bn loan (part of the 2009 maturities).