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Al-Suwaidi Says Dubai Isn’t Likely to Need Additional Central Bank Support

by on March 15, 2010

By Camilla Hall March 15 (Bloomberg) — United Arab Emirates Central Bank Governor Sultan bin Nasser al-Suwaidi said that Dubai isn’t likely to need more central bank aid as one of its companies restructures $26 billion in debt. “They haven’t discussed this issue with us and I don’t think it will be necessary,” al-Suwaidi said today in an interview in Abu Dhabi. His answer came in response to a question on whether Dubai would need further federal support. Dubai, the second-biggest of the U.A.E.’s seven emirates, and its state-owned companies borrowed money to transform the sheikhdom into a tourism, trade and financial services hub. The central bank, the Abu Dhabi government and two Abu-Dhabi-based banks pledged $20 billion to support Dubai’s companies after global credit markets froze. Dubai World, one of the biggest state-owned holding companies, is in talks to delay $26 billion in debt. It will ask banks for permission to delay loan repayments when it presents a plan this month, three bankers familiar with the negotiations said on March 8. The company will present a restructuring proposal to its creditors after its advisers complete valuing the company’s assets, a person close to the Dubai government said on Feb. 17. Treated Equally “They’re mindful that the restructuring package does not impact the reputation of the emirate,” al-Suwaidi said. “All banks will be treated equally and in a fair way. There will be no discrimination between local or international banks.” The central bank is taking an advisory role in the talks, he said. It is not part of the committee charged with the restructuring. Credit default swaps linked to Dubai fell 26 basis points to 440.5 basis points today, according to prices provided by CMA DataVision in London. Nakheel PJSC’s $750 million Islamic bond maturing in January gained 1.375 cents to 63 cents on the dollar at 4:28 p.m. in Dubai, according to Citigroup Inc prices. The bond headed for the highest close since Jan. 15. Nakheel is a property unit of Dubai World that is building palm-shaped islands off the coast of the emirate. U.A.E. banks are well capitalized and won’t “be impacted in a major way,” by the debt restructuring, al-Suwaidi said today. U.A.E. banks have a capital adequacy ratio of 19.2 percent, he said. The International Monetary Fund estimates Dubai borrowed $109.3 billion, about 130 percent of the emirate’s gross domestic product, during a real-estate boom that ended in 2008. “Once the restructuring is put in front of banks I think they will have their own decisions whether to accept or not,” he said. “It’s best to make it attractive and acceptable to banks,” he said. The proposal will be discussed with banks “very soon.” To contact the reporter on this story: Camilla Hall in Abu Dhabi at chall24@bloomberg.net

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Dubai Shares Gain Most in 3 Months on Debt Deal Expectations; Shuaa Jumps

by on March 14, 2010

By Dana El Baltaji March 14 (Bloomberg) — Dubai’s benchmark stock index rose the most in three months, leading gains in the Persian Gulf, as investor confidence rose on the possibility the government may back state-owned Dubai World. Shuaa Capital PSC, the biggest investment bank in the United Arab Emirates, soared 11.5 percent, the most in three months. Dubai Financial Market PJSC , the only Gulf Arab stock market to sell shares to the public, increased 9.6 percent. Dubai Investment PJSC , the owner of stakes in more than 40 companies, gained 3.1 percent. The Dubai Financial Market General Index advanced 3.7 percent, the most since Dec. 14, to 1,746.6. “One of the messages investors wanted to hear and got last week was that there’s a possibility of a government guarantee,” said Tarek Zohny , a Dubai-based trader at EFG-Hermes Holding SAE. Investors saw it as a sign that Dubai’s troubles may be over, he said. The government is “always behind” Dubai World, Sheikh Ahmed Bin Saeed al-Maktoum, chairman of Dubai Supreme Fiscal Committee and the Chief Executive of Emirates Airline and Group, said in New Delhi on March 12. The government is separating “the bad business from the good business,” he said. Dubai World, which is restructuring $26 billion in debt, will ask banks for permission to delay loan repayments when it presents a plan this month, said three bankers familiar with the negotiations on March 8. The company will present a restructuring proposal to its creditors after its advisers finish valuing company assets, a person close to the Dubai government said Feb. 17. Shuaa Capital Advances Shuaa Capital advanced to 1.36 dirhams. The bank was raised to “neutral” from “underweight” at HSBC Holdings Plc with a price estimate of 1.40 dirhams on March 10. Dubai Financial Market increased the most in three months to 1.82 dirhams. HSBC raised its rating to “neutral” from “underweight” with a price estimate of 1.60 dirhams on March 10. Dubai Investments rose to 1 dirham, the highest since January 11. Abu Dhabi’s ADX General Index gained 1.2 percent, and Qatar’s benchmark stock index rose 0.9 percent. The Kuwait Stock Exchange Index increased 0.4 percent. Bahrain’s gauge dropped 0.3 percent and Oman’s MSM30 Index dropped 0.1 percent. Saudi Arabia’s Tadawul All Share Index advanced 0.2 percent at 1:30 p.m. in Riyadh. To contact the reporter responsible for this story: Dana El Baltaji in Dubai delbaltaji@bloomberg.net .

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Dubai World Said to Ask Banks to Delay Repayment in $26 Billion Debt Talks

March 8, 2010

By Arif Sharif March 8 (Bloomberg) — Dubai World, the state-owned holding company in talks to renegotiate about $26 billion of debt, will ask banks for permission to delay loan repayments when it presents a plan this month, said three bankers familiar with the negotiations. Banks may be able to avoid a so-called haircut, where they receive less money than they’re owed, if they wait to be repaid, said two of the bankers, who declined to be identified because the talks are private. The banks may also receive a guarantee from Dubai’s government, one of the bankers said. Dubai World and its Nakheel PJSC and Limitless LLC property units used loans to finance real estate projects such as palm tree-shaped islands off the emirate’s coast, which they struggled to refinance amid the credit crisis. Dubai World said in November it would seek to delay repaying all loans until May, sparking the biggest plunge in developing-nation stocks. “The proposal will be a meaningful one,” said Saud Masud , Dubai-based head of Middle Eastern research at UBS AG . “I would highly doubt that what they come out with will be accepted and everyone moves on.” The emirate’s benchmark Dubai Financial Market General Index rose 1.7 percent to 1,649.14 today. Credit default swaps linked to Dubai fell 20 basis points to 487 basis points, prices provided by CMA DataVision in London show. Nakheel PJSC’s 2.75 percent $750 million sukuk bond maturing in January gained 2 percent to 51.25 cents on the dollar. It closed at 50.25 cents on the dollar on March 5. Deloitte, Moelis Deloitte LLP and Moelis & Co., Dubai World’s advisers, are asking the Dubai Financial Support Fund for more money to fund interest payments on the loans in the meantime, the bankers said. Dubai World will primarily rely on asset sales to finance the payments, bankers said. Spokesmen for Dubai World and the Dubai Financial Support Fund declined to comment. Dubai World will approach lenders for the first time this week with a plan to restructure its debt, the Financial Times reported today. The company has asked creditors to meetings in London from today, the FT said. Dubai World will present a restructuring proposal to its creditors after its advisers complete valuing the company’s assets, a person close to the Dubai government said Feb. 17. The final proposal will be made after consultations with the Abu Dhabi government and the United Arab Emirates’ central bank, which along with two Abu Dhabi-owned banks lent $20 billion last year to Dubai’s financial support fund to help state-owned companies during the credit crisis, he said. Bond Swap Nakheel’s $1.73 billion of bonds may be swapped for new securities, the person said. Under another option, banks seeking early repayment would get less than those that wait, he said. More than 90 banks are owed money by Dubai World. Seven of its biggest creditors, HSBC Holdings Plc , Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc , Bank of Tokyo-Mitsubishi UFJ Ltd., Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, are negotiating with Dubai World on behalf of the lenders, according to bankers. To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

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Citigroup’s Pandit Said to Plan to Thank Taxpayers for $45 Billion Bailout

March 3, 2010

By Bradley Keoun March 4 (Bloomberg) — Citigroup Inc. Chief Executive Officer Vikram Pandit plans to tell U.S. taxpayers he’s grateful for the $45 billion bailout that helped stave off a deposit run at the bank in 2008, a person close to the company said. Pandit, scheduled to appear in Washington today before a panel overseeing the bank-bailout program, will acknowledge that the infusion stabilized Citigroup, said the person, who requested anonymity because the planned testimony isn’t public. Pandit will thank the government for providing the money, the person said. Pandit, 53, is scheduled to answer questions about the impact of government assistance on the New York-based bank. The five-person Congressional Oversight Panel, led by Harvard Law School Professor Elizabeth Warren, is charged with reviewing the Treasury’s expenditures under the $700 billion Troubled Asset Relief Program. Citigroup, the third-biggest U.S. bank by assets, repaid $20 billion of bailout funds in December. The Treasury holds a 27 percent stake after converting $25 billion of funds into common stock. The government currently has a $1.15 billion paper profit on the stake, based on its 7.7 billion shares and yesterday’s stock price of $3.40. The Treasury said in December it plans to liquidate its common stake this year. Molly Meiners , a Citigroup spokeswoman in Washington, declined to comment. Pandit testified in Washington in February 2009 alongside fellow CEOs Jamie Dimon of JPMorgan Chase & Co., Lloyd Blankfein of Goldman Sachs Group Inc., John Mack of Morgan Stanley and the since-retired Kenneth Lewis of Bank of America Corp. At the February 2009 hearing, Pandit pledged to cut his own salary to $1 a year until the bank returned to profitability . Citigroup lost $1.6 billion in 2009, compared with the record $27.7 billion net loss in the previous year. “I get the new reality and I will make sure Citi gets it as well,” Pandit said then. Pandit ended up getting $125,001 last year because he collected paychecks in early 2009 before he made the pledge. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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Thermo Fisher Said to Submit $6 Billion Unsolicited Bid to Buy Millipore

February 22, 2010

By Serena Saitto and Rachel Layne Feb. 22 (Bloomberg) — Thermo Fisher Scientific Inc. , the world’s largest maker of lab instruments, made an unsolicited takeover offer of about $6 billion for Millipore Corp. , according to a person close to the situation. Millipore hired Goldman Sachs as financial adviser after receiving the bid and a deal could be agreed as early as next week, said the person who declined to be identified because the talks aren’t public. The purchase would be Thermo Fisher Chief Executive Officer Marc Casper ’s first large acquisition since taking over in October for Marijn Dekkers , who left to take the CEO post at Bayer AG. Dekkers simplified the then-Thermo Electron Corp. by consolidating publicly-traded entities, and his $10.6 billion purchase of Fisher Scientific in 2006 created the world’s largest maker of medical laboratory equipment. Adding Millipore would bolster Thermo’s biotechnology presence. “Strategically, a combination would make sense between the peers, as it would enhance Thermo Fisher’s exposure to the faster-growing biotech sector,” said Joel Levington , an analyst with Brookfield Investment Management Inc. in New York. Millipore rose $15.66, or 22 percent, to $87 at 1:21 p.m. New York time in New York Stock Exchange composite trading. The shares more than doubled earlier, the biggest jump since at least November 1982, when Bloomberg began tracking stock performance. Thermo Fisher fell $2.86, or 5.8 percent, to $46.36, the biggest decline in almost 10 months. Joshua Young , Millipore’s director of investor relations, didn’t immediately return a phone call and e-mail seeking comment. Karen Kirkwood, a spokeswoman for Thermo Fisher, didn’t immediately return a phone call seeking comment. Thermo Fisher , based in Waltham, Massachusetts, makes a range of analytical instruments and laboratory equipment used in manufacturing, health care and environmental industries. Millipore, based in Billerica, Massachusetts, is a supplier of diagnostics and laboratory equipment to the biotechnology industry. To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net .

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Citigroup Said to Replace Peterson With Buckley as Head of Its Japan Unit

January 10, 2010

By Pierre Paulden Jan. 10 (Bloomberg) — Citigroup Inc. replaced the head of its Japanese unit, Douglas Peterson , with Darren Buckley , after Peterson oversaw the sale of assets in Japan, a person close to the bank said. Buckley is in charge of Citibank Japan Ltd., said the person, who declined to be identified because the appointment hasn’t been publicly announced. The Wall Street Journal reported yesterday the change without saying where it got the information. Peterson and Buckley couldn’t be reached outside of business hours. Citigroup spokeswoman Danielle Romero-Apsilos in New York declined to comment. Buckley was named president of Citibank Japan in September 2008, after running the bank’s Japanese consumer-finance unit CFJ KK. He joined Citigroup in London in 1992. Peterson will return to New York to help Citigroup repay the U.S. government’s bailout, the Journal reported. Peterson, 51, joined Citigroup in 1985 and served as chief auditor beginning in 2000. In May 2004, he was named head of the bank’s Japan unit. That year, Peterson told Japanese lawmakers his mandate was to fix compliance breaches that cost the company its private banking license in the country. Citigroup agreed in May to sell its Japanese retail brokerage and parts of its investment-banking business to Sumitomo Mitsui Financial Group Inc. for 545 billion yen ($5.8 billion). To contact the reporter on this story: Pierre Paulden in New York at ppaulden@bloomberg.net

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Jamie Dimon Reportedly Entreated British Politician To Reconsider U.K. Bonus Tax

December 28, 2009

Dec. 28 (Bloomberg) — JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told U.K. Chancellor of the Exchequer Alistair Darling that his 50 percent tax on banker bonuses would unfairly penalize the U.S. lender, a person close to the firm said.

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Dubai Sold Abu Dhabi $10 Billion Five-Year Bonds to Repay Nakheel’s Debt

December 16, 2009

By Vivian Salama and Haris Anwar Dec. 16 (Bloomberg) — Dubai borrowed $10 billion from Abu Dhabi this week by selling its neighbor five-year bonds paying an annual interest rate of 4 percent, said a person close to the government, who is familiar with the transaction. Those are the same terms Dubai paid for $10 billion from the Abu Dhabi-based central bank in February and another $5 billion from government-controlled National Bank of Abu Dhabi PJSC and Al Hilal Bank in November. Abu Dhabi’s government provided the funds to Dubai on Dec. 14 to help Dubai World, the state-owned holding company, avoid defaulting on a $4.1 billion Nakheel PJSC bond payment that roiled global financial markets. The rest of the money will cover Dubai World’s interest and operating costs until the company reaches a standstill accord with creditors, Dubai’s government said. “This information should go some way toward mitigating market speculation about potential hidden costs of this funding and whether there are any assets involved in the transaction,” said Chavan Bhogaita , head of credit research at National Bank of Abu Dhabi, the United Arab Emirates’s second-largest lender by assets. Dubai World said Dec. 1 it’s seeking to restructure $26 billion of debt, less than half the $59 billion of liabilities it had at the end of 2008. Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses may need help making payments, Morgan Stanley said in a report Dec. 8. Dubai Autonomy Abu Dhabi is the largest of the seven emirates that formed the U.A.E. in 1971 and owns more than 90 percent of its oil reserves, the world’s sixth largest. Dubai, the second-largest emirate, has traditionally guarded its autonomy, keeping full control of economic affairs. After the emirate and its state-controlled companies borrowed $80 billion to diversify away from dwindling oil supplies, Dubai’s ruler, Sheikh Mohammed Bin Rashid Al Maktoum , has been forced to seek Abu Dhabi’s help three times this year as credit dried up, triggering a property crash in the city state. To contact the reporter on this story: Vivian Salama in Dubai vsalama@bloomberg.net Haris Anwar in Dubai on Hanwar2@bloomberg.net

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Dubai Ruler Says Bond Will Be `Well Received,’ Tells Critics to `Shut Up’

November 9, 2009

By Arif Sharif and Maher Chmaytelli Nov. 9 (Bloomberg) — Dubai’s second half of a $20 billion bond program will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up,” the emirate’s ruler Sheikh Mohammed Bin Rashid Al-Maktoum said. “The second tranche of the bond program will be well received, it will be widely subscribed and will be used directly to meet Dubai’s obligations in the next few years,” Sheikh Mohammed told an investors conference organized by Bank of America Merrill Lynch in Dubai today. Dubai, the second-biggest of seven states that make up the United Arab Emirates, raised $1.93 billion last month from the biggest sale of Islamic bonds in the Gulf Arab region this year. The $1.25 billion dollar-denominated portion of the bond traded at a yield of 6.42 percent today, compared with a 3.85 percent yield investors are seeking for a five-year Abu Dhabi bond. The sheikhdom set up the $20 billion support fund after the global credit crunch hurt its property, finance and tourism industries, leaving companies unable to raise debt as credit markets froze. The first $10 billion was raised by selling five- year bonds to the U.A.E. central bank in February, and some of the money went to property developers like Nakheel PJSC, which is building palm tree-shaped islands off Dubai’s coast. Dubai, Abu Dhabi The second half of Dubai’s bond program would attract “majority government and minority private sector in my opinion,” said Mohammed Alabbar , chairman of Emaar Properties PJSC, and a member of the Dubai Executive Council in an interview with CNN on Oct. 9. The bond may be issued in November, he said. Central Bank Governor Sultan bin Nasser al-Suwaidi said on July 15 that the U.A.E. may buy part of Dubai’s second bond offering. “Meaningful participation by the private sector would be a strong signal for Dubai that investor sentiment has improved,” said Tristan Cooper , a Dubai-based Middle East sovereign analyst at Moody’s Investors Service. “This provides a motivation for the Dubai government to get private investors involved even if it costs more than selling it all to the federal government.” Dubai allowed foreigners to buy property in some parts of the emirate in 2002, sparking a five-year building frenzy. The boom ended after the credit crisis crimped mortgage lending, forcing the emirate to look to Abu Dhabi, the U.A.E.’s capital and holder of 8 percent of global oil reserves, for support. “I assure you that we will be there for each other when we need it,” Sheikh Mohammed said, referring to the relationship between Dubai and Abu Dhabi. “I want to tell these people who nag about Dubai and Abu Dhabi to shut up.” Stocks Gain Dubai stocks extended gains after the ruler’s comments, climbing to the highest in a week. The DFM General Index added 1.4 percent, while Abu Dhabi’s measure rose 0.2 percent. Sheikh Mohammed’s statement “reiterates the strong link between Dubai, a non-oil state, and the important oil state of Abu Dhabi,” said Luis Costa , an emerging market debt strategist at Commerzbank AG in London. “Most investors are raising their expectations of net issuance out of the Middle East in 2010.” Dubai’s government borrowed $10 billion until last year and its state-related companies $70 billion to help diversify its economy. The emirate built a business park for financial service companies – which is home to the regional offices of Goldman Sachs Group Inc., Standard Chartered Plc, and HSBC Holdings Plc – as well as started a stocks, derivatives and energy exchange. The sheikhdom and its state-owned companies have to repay $15.8 billion of bonds and loans maturing this year, $9.2 billion in 2010, $19.8 billion in 2011 and $17.3 billion in the following year, according to a Deutsche Bank AG report in August. The government said yesterday it repaid a $1 billion civil aviation sukuk due Nov. 4. The seizure of credit markets sparked fears Dubai may not be able to refinance debt. Helps Sentiment The ruler’s comments “will help sentiment,” said Fadi Al Said , head of equities at ING Investment Management (Dubai) Ltd. “These strong statements coming from him directly are a clear message based on the success of the last sukuk issue. I think there will be a substantial portion that might get picked up by investors.” Dubai World, the state-owned holding company, is in talks with banks to reschedule at least $12 billion of debt, a person close to the talks said Sept. 14, speaking anonymously because the negotiations are private. Dubai World unit Nakheel must repay a $3.5 billion Islamic bond due at year-end. “Some may believe that Dubai could have acted faster in combating the impact” of the credit crisis, Sheikh Mohammed said. “We preferred to wait rather than rushing because we are keen to ensure strengthening our major enterprises and restructure them in a way that will have the momentum and the strength to cope with the realties of the new economy.” To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net or

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Bank of America Discussed Merrill Lynch Losses in November, E-Mails Reveal

October 21, 2009

By David Mildenberg Oct. 21 (Bloomberg) — Bank of America Corp. discussed losses at Merrill Lynch & Co. in early November, more than a month before telling regulators the lender needed U.S. help to complete its takeover, according to documents provided to congressional investigators. “Read and weep,” Chief Accounting Officer Neil Cotty wrote in a Nov. 5 e-mail to Chief Financial Officer Joe Price that included Merrill’s October financial report . The e-mail, which estimated markdowns and “other larger items” of $5.3 billion, was included in 1,000 pages of documents that Bank of America gave to the House Oversight Committee last week. The committee is investigating how the lender’s rescue of Merrill Lynch led to a government bailout for Bank of America, the biggest U.S. lender. Chief Executive Officer Kenneth D. Lewis didn’t tell his shareholders about Merrill’s losses before they voted to approve the deal on Dec. 5, and didn’t inform regulators until mid-December that the takeover was in danger. The bank has said Merrill’s losses didn’t accelerate until after the shareholder vote. Two days later, on Dec. 7, Merrill Corporate Controller Gary Carlin e-mailed the brokerage’s updated November report to Cotty. “What a disaster,” Carlin wrote. The New York-based brokerage’s fourth-quarter loss eventually swelled to $15.8 billion. Copies of the e-mails were provided to Bloomberg by a person close to the panel, who declined to be identified because the documents from the Charlotte, North Carolina-based bank haven’t been released. Hearing Delayed Jenny Rosenberg , spokeswoman for the House Oversight Committee, declined to comment. The panel is led by Edolphus Towns , a New York Democrat. An Oct. 22 hearing at which former General Counsel Timothy Mayopoulos and Federal Deposit Insurance Corp. Chairman Sheila Bair were to appear has been postponed until next week, Rosenberg said. “The strategic wisdom of the Bank of America-Merrill Lynch deal is now obvious to everyone,” bank spokesman Lawrence Di Rita said yesterday. “These documents and e-mails reveal the good-faith deliberations among those who understood that first.” Lewis, 62, has said that while the bank was aware Merrill was accumulating losses , they didn’t balloon until after the shareholders had already voted. “In mid-December, the forecast losses accelerated dramatically,” Lewis testified to the committee on June 11. “It wasn’t that we didn’t know about losses. The concern was the fact that these losses accelerated.” Lehman Collapse Merrill, the world’s biggest broker at the time, agreed in September to be acquired after more than $50 billion of losses and writedowns tied to the collapse of the subprime-mortgage market. Bank of America struck the agreement the same weekend that Lehman Brothers Holdings Inc. collapsed. The U.S. provided $20 billion in fresh capital and a $118 billion backstop on loans and mortgage-based securities to shore up the Merrill takeover. Public disclosure of Merrill’s losses came on Jan. 16 when the bank announced its first quarterly loss in 17 years and $20 billion in U.S. aid to absorb potential Merrill losses. To contact the reporter on this story: David Mildenberg at dmildenberg@bloomberg.net

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