IslamicFinance.de

Thousands of people attended the first day of an auction of vehicles owned by indebted Saudi Arabian tycoon Maan al-Sanea. Officials say the sale will go towards repaying about 18 billion riyals (US$4.8 billion) owed to creditors. The businessman was detained by authorities last year for unpaid debt dating back to 2009 when his company, Saad Group, defaulted on payments. The first phase of the auction was launched this week, with around 900 vehicles including lorries, buses, diggers, forklift trucks and golf carts. Later stages of the process will include property, as well as machinery, ceramics and furniture. Prospective buyers were mainly businessmen from local construction companies and other contractors. Money raised from the first phase of the auction will go towards repaying creditors. Priority for the repayment will first go to repaying unpaid workers, vendors and other companies owed money will be given next priority, with banks at a later stage.

State-controlled utility Saudi Electricity is in talks with regional and international banks about issuing a US dollar-denominated sukuk. A number of companies in the kingdom are considering sukuk issuance to offset a decline in revenues due to lower oil prices. Oil giant Saudi Aramco issued a debut $3 billion-equivalent sukuk in the Saudi local market in April, while ACWA Power is expected to issue an international bond of at least $600 million this week. Saudi Electricity issued $2.5 billion in sukuk in 2014, split between a $1.5 billion sukuk maturing in 2024 and $1 billion due in 2044. The company recently repaid a $500 million five-year sukuk it issued in 2012.

The UN appointed Special Rapporteur on extreme poverty in the Gulf has concluded his mission on 19th January. In his report Dr. Mohamed Ramady highlights that poverty encompasses non-financial targets that encompasses women’s right to work and move freely, inhibiting factors that lead to family poverty. It is meaningless to adopt an absolute line given a large variance in GCC GDP per capita, ranging from around $ 25,000 in Saudi Arabia to $ 95,000 in Qatar. National poverty line figures accordingly vary from $ 1,300 per month to $ 5,000 levels. Cash payment handouts to reduce subsidies to balance national budgets are short-term measures. The key to poverty eradication is education, access to work and removal of social restrictions. To varying degrees, all the Gulf countries have given emphasis to ensuring more female work and civil and political participation. The UN Report also highlighted an uneven corporate social responsibility to carry out effective training and offer more opportunities for female workers and handicapped employees.

According to a recent Fitch Ratings report, major Saudi banks continue to report liquidity coverage ratios (LCRs) above 100% despite a 30% outflow of government-related deposits. The banks’ ability to withstand such a shock demonstrates that their liquidity positions are resilient. The Saudi Arabian Monetary Agency (SAMA) released $5.3 billion (20 billion Saudi riyals) of government-related deposits into the banking sector yesterday. According to Fitch Ratings, Saudi banks will continue to adopt careful liquidity management strategies in order to protect their LCRs from falling below current levels.