haris-anwar

Video: Conrad on House Budget Cuts: Political Capital With Al Hunt

by on February 19, 2011

Feb. 18 (Bloomberg) — Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, talks with Bloomberg’s Al Hunt about House Republicans’ budget cut demands. Bloomberg’s Julianna Goldman and Lisa Lerer discuss President Barack Obama’s budget. Haris Anwar reports on U.S.-Pakistan relations after a U.S. consulate worker was arrested for shooting dead two Pakistanis. Commentators Kate O’Beirne and Margaret Carlson talk about the possibility that New Jersey Governor Chris Christie will be the Republican Party’s nominee for president in the 2012 election. (Source: Bloomberg)

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Video: Conrad on House Budget Cuts: Political Capital With Al Hunt

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Abu Dhabi’s Tourism Development Is Said to Plan Bond Sale to Fund Projects

by on May 16, 2010

By Haris Anwar May 16 (Bloomberg) — Tourism Development & Investment Co., a state-owned developer of hotels in Abu Dhabi, hired banks to sell bonds as it seeks long-term financing for projects, two people familiar with the transaction said. Standard Chartered Plc, Citigroup Inc., and BNP Paribas are among banks that will manage the sale that may be completed in three months, said the people, who declined to be identified as the terms haven’t been finalized. TDIC may seek 10-year funding, one of the people said. Standard & Poor’s on May 12 removed the developer and two other Abu Dhabi government-controlled companies from creditwatch, citing their “almost certain” government support. TDIC will continue to monitor the markets and evaluate its financial requirements to assess when will be the most appropriate time to raise funds, the company’s spokeswoman said in an e-mailed response to questions from Bloomberg News. She declined to be identified because of company policy. Spokesmen at Standard Chartered, Citigroup and BNP Paribas didn’t respond to e-mails seeking comment. Gulf issuers have raised about $6.56 billion this year, less than half of the amount they borrowed during the first six months of 2009 as the region suffers from loan defaults and debt restructurings, Bloomberg data show. TDIC sold $1 billion of five-year Islamic bonds in October that paid 4.949 percent fixed return, according to data compiled by Bloomberg. That bond closed at 102.5 cents on the dollar on May 14. Abu Dhabi is the largest member of the United Arab Emirates and holder of more than 90 percent of the country’s oil reserves. To contact the reporter on this story: Haris Anwar in Dubai at hanwar2@bloomberg.net

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Nakheel Bonds Advance as JPMorgan Says Creditors May Be Paid at Face Value

March 9, 2010

By Haris Anwar and Dana El Baltaji March 9 (Bloomberg) — Nakheel PJSC bonds, part of parent Dubai World’s planned $26 billion debt restructuring, climbed the most in two months after JPMorgan Chase & Co. said creditors may get paid face value. The developer’s $750 million sukuk, or Islamic bond, added 5 cents, the most since Jan. 6, to 56.25 cents on the dollar at 4:31 p.m. in Dubai, prices compiled by Bloomberg show. The bond due in January 2011 has climbed from a low of 46.5 cents on Feb. 17 and traded as high as 85.5 cents on Nov. 25, when Dubai World said it may delay debt payments. Nakheel’s debt “may not warrant haircuts, and restructuring may only involve long maturity extensions,” JPMorgan said in a report. United Arab Emirates Economy Minister Sultan bin Saeed al-Mansouri said today he’s confident state- owned holding Dubai World will reach an accord with creditors, while Finance Minister Sheikh Hamdan Bin Rashid Al Maktoum said the seven-emirate U.A.E. stands by Dubai. The bank’s “report is very positive and it gives some clarity,” Louis Gargour , the London-based chief investment officer at hedge fund LNG Capital LLP and a holder of Nakheel debt, said in an interview. “You might have a situation where you have sovereign assistance in paying off at maturities.” Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30. The announcement sparked the biggest plunge in developing-nation stocks and the largest increase in emerging-market bond yields over U.S. Treasuries in four weeks, while the cost to protect against a default by Dubai doubled. Neutral Rating Dubai World may propose to creditors excluding Nakheel holders a 20 percent cut in face value, a 10-year extension on maturities and a government repayment guarantee, the bank said. A spokesman for Dubai World declined to comment. JPMorgan maintained its neutral rating on Nakheel’s bonds, citing the “unpredictable nature” of the restructuring and “the small probability that sukuks get paid at par upon stated maturity.” The debt “would also have some potential upside if the government guarantees principal repayment under a restructuring plan that involved little or no haircut,” Zafar Nazim , a London-based analyst at the bank, wrote in the report dated yesterday. Dubai avoided a default in December on $4.1 billion of payments due for Nakheel’s 2009 bond after Abu Dhabi and its banks provided $10 billion of loans. ‘Precedent’ “There was a precedent set in 2009 when Nakheel’s debt was settled,” said Jamil Hallak , head of credit trading at Standard Chartered Plc in Dubai. ’’Investors assume that the same will happen in 2010 and 2011, although it’s less likely that they redeem it in full. I think the default is not a scenario that I expect, and that a rollover is more likely.” Dubai, the second-biggest of seven emirates that make up the U.A.E., and its state-owned companies racked up $109.3 billion of debt during a real-estate boom that ended in 2008, according to International Monetary Fund estimates, as the sheikhdom sought to transform into a tourism, trade and financial services hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai- based companies to raise new loans to refinance maturing debt. Swap Option All restructuring options are being considered, including swapping Nakheel’s $1.73 billion bonds with new securities, a person close to the Dubai government said on Feb. 17. Nakheel, a developer of palm-shaped islands, has two outstanding Islamic bonds, a 3.6 billion-dirham ($980 million) floating-rate note due May 13 and a 2.75 percent, $750 million sukuk maturing in January 2011. Moody’s Investors Service estimated last month that U.A.E. banks hold about $15 billion of Dubai World debt. ’’Dubai’s domestic banks’ exposure to Dubai World would be an argument that goes against the government demanding steep haircuts,’’ New York-based JPMorgan said in the report. “Assuming two-thirds or $10 billion of this amount relates to Dubai’s banks, a 40 percent haircut implies provisioning of $4 billion,” the bank said. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net ;

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Dubai World Removes Private Equity CEO Jackson as Company Refinances Debt

January 20, 2010

By Haris Anwar Jan. 20 (Bloomberg) — Dubai World replaced the chief executive officer of its private equity unit Istithmar World, the owner of luxury retailer Barneys New York, as the state- owned company seeks to renegotiate about $22 billion of debt. David Jackson was replaced by Istithmar’s chief investment officer Andy Watson , who was appointed acting chief executive with immediate effect, Dubai World said today in an e-mailed statement. Watson is a former director at Barclays Capital. “Dubai World is cleaning house and signaling to investors that it’s making difficult decisions and responding to their criticisms,” said Louis Gargour , the chief investment officer at hedge fund LNG Capital LLP in London. “Dubai World may sell some of its non-core assets. We believe that they will resist selling them or any assets for that matter at 50 cents on a dollar.” Istithmar and Dubai World struggled last year on investments including Barneys and CityCenter, an $11 billion project in Las Vegas. Istithmar bought Barneys in 2007 for $942.3 million. Abu Dhabi, the wealthiest member of the United Arab Emirates, provided a $20 billion bailout in 2009 for Dubai as the emirate ran into difficulties meeting payments on debt used to finance real-estate projects. ‘Maximize Value’ Debt from subsidiaries including Istithmar World, Infinity World Holding and Ports & Free Zone World will be excluded from the negotiations as these companies are on “a stable financial footing,” Dubai World said on Dec. 1. “Today, Istithmar World is focused on the steady-state management of existing assets to maximize value rather than on private equity investment,” Dubai World’s Chief Restructuring Officer Aidan Birkett said in today’s statement. As recently as October, Jackson told CNBC that Istithmar was making “small bolt-on acquisitions.” “We still see positive prospects,” Jackson said in the Oct. 23 interview. “I’m not going anywhere.” Dubai, the second-biggest of seven states that make up the U.A.E., and its state-owned companies borrowed at least $80 billion until 2008 to transform the emirate into a tourism and financial hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise new loans to refinance maturing debt. New York Jackson became Istithmar’s CEO in 2006 and spearheaded the company’s drive to expand its portfolio. Istithmar spent at least $16.4 billion on publicly reported investments this decade, according to the Monitor-FEEM SWF transaction database. Among its investments are Yacht Haven Grande, a marina complex in the Caribbean, the W Hotel Union Square in New York and GLG Partners Inc., a hedge fund. Istithmar may halt investments as part of a restructuring effort that may result in a sale of the fund or its assets, people familiar with the plan said in September. The company’s co-chief investment officers John Amato and Felix Herlihy left the firm the same month. “Avoiding sales and restructuring maturities still seems to be the best way out for them,” Gargour said. ”A further large cash injection is likely and the best outcome for the regions reputation and solvency looking forward.” To contact the reporters on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net Arif Sharif in Dubai at asharif2@bloomberg.net

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Dubai World Said to Present Standstill Deal on $22 Billion Debt in January

December 22, 2009

By Arif Sharif and Haris Anwar Dec. 22 (Bloomberg) — Dubai World will present a standstill offer to banks in early January as the state-owned holding company attempts to restructure about $22 billion of debt, three bankers who attended a presentation on the matter yesterday said. Dubai World, which owns property unit Nakheel PJSC, port operator DP World Ltd. and private equity company Istithmar World PJSC, told lenders it needs time to allow its assets to recover from the drop in value following the credit crunch, said the bankers, who declined to be identified because the meeting was private. Some assets may be sold over time to repay debt, they said. “They need to sit down and talk it over in more than one meeting,” said Hesham Bakry , Dubai-based institutional sales manager at Al-Futtaim HC Securities Co. “The positive thing is that they are meeting and both parties want to find a better way to handle this issue. It should have happened a lot earlier.” Dubai World, one of the emirate’s three main state-owned business groups, announced Nov. 25 it would seek to freeze or delay repaying debt until at least May 30. The company said Dec. 1 it wants to alter terms on about $26 billion of debt, including of property unit Nakheel PJSC, which is building palm tree-shaped islands off the emirate’s coast. It repaid $4.1 billion on an Islamic bond from Nakheel last week after Dubai received a $10 billion loan from Abu Dhabi. ‘Orderly’ Restructuring Dubai World will work with creditors to reach a standstill agreement on its borrowing “in an orderly way,” it said in a statement following yesterday’s meeting. Dubai’s government promised “financial support to cover working capital and interest expenses to ensure the continuity of key projects” if a standstill is achieved, according to the statement. The cost of protecting Dubai government debt from default fell 2 basis points to 444, according to CMA DataVision prices for credit-default swaps, contracts that fall as perceptions of credit quality improve. A basis point is equivalent to $1,000 a year on a contract protecting $10 million of debt. The terms of government support for Dubai World have yet to be agreed upon, two bankers involved in the talks said ahead yesterday’s gathering. The lack of an accord would lead to a delay in making the standstill request, they said. The complexity of Dubai World Group and its funding structure are to blame for the delay, one banker said ahead of the meeting, citing a Dec. 18 letter from the company’s Chief Restructuring Officer Aidan Birkett about the agenda for the gathering. About 100 bankers attended the presentation at the Dubai International Convention and Exhibition Centre. Borrowing to Diversify Dubai, the second-biggest of seven states that make up the United Arab Emirates, and its state-owned companies borrowed at least $80 billion until last year to transform the emirate into a tourism and financial hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise new loans. 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 earlier this month. Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in the report. Dubai set up a financial support fund earlier this year to help state-related companies facing problems raising cash amid the credit crisis. It raised $10 billion for the fund in February by selling bonds to the U.A.E. central bank and another $5 billion in November through a bond sale to Abu Dhabi government-controlled banks. U.A.E. Minister of Economy Sultan bin Saeed al-Mansouri said further federal government support for Dubai should be “studied” properly. “Each issue has to be studied in a proper manner, evaluated and based on that an answer will be provided at the federal level or the local level,” al-Mansouri told reporters in Abu Dhabi today when asked whether the federal government will extend more financial support to Dubai. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net ; Arif Sharif in Dubai at asharif2@bloomberg.net

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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’s Possible Nakheel Default Tomorrow to Affect Debt of $5.25 Billion

December 13, 2009

By Haris Anwar Dec. 13 (Bloomberg) — Nakheel PJSC’s possible non-payment of its Islamic bond due tomorrow will trigger cross defaults on two other securities, bringing the total of affected debt to $5.25 billion, bond documents show. Investors are waiting to see if the Dubai state-controlled developer will pay the maturing $3.52 billion Islamic bond, known as sukuk. The Dubai government said Nov. 25 state-run holding company Dubai World is seeking a “standstill” agreement on its debt, including for the Nakheel unit. The cross default would trigger if “the Nakheel Holdings Group, Nakheel World or the guarantor shall fail to make any payment,” at the expiration of the grace period, the bond documents said. Tomorrow’s deadline is followed by a 14-day grace period to remedy the default and to prevent bondholders from starting legal proceedings. Nakheel’s other two bonds are a 3.6 billion-dirham ($980 million) floating-rate note due in May next year and a 2.75 percent $750 million sukuk maturing in January 2011. “The chances of a full payment at this point are very slim,” said Nish Popat , head of fixed income at ING Investment Management Dubai Ltd. “There is a lack of clarity on how the standstill initiative is progressing. Investors are just waiting and speculating.” Nakheel’s bond maturing tomorrow rose 1 percent to 53 cents on the dollar on Dec. 11, on speculation that the developer may seek to avoid a default. The bond has dropped more than 50 percent since the Nov. 25 announcement. Dubai World began talks to restructure $26 billion of debt. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net

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Qatar Bonds Gain After Largest Emerging-Market Debt Sale Is Oversubscribed

November 18, 2009

By Laura Cochrane and Haris Anwar Nov. 18 (Bloomberg) — Qatar’s bonds rose after the largest-ever sale of debt by an emerging-market government received $28 billion of orders, four times the amount issued. Qatar’s $3.5 billion of five-year bonds, half the total $7 billion sale, advanced to 100.2 cents on the dollar from an issue price of 99.87 cents, according to ING Bank NV data on Bloomberg at 5:05 p.m. in Doha. The emirate’s $1 billion of 30- year bonds rose 3 percent to 102.8 cents, according to prices provided by DZ Bank AG. “This is the largest debt deal from an emerging-market sovereign to date,” said Fabianna Del Canto , syndicate manager at Barclays Capital, a lead arranger for the sale, in London. “Qatar has firmly established itself as the premier borrower in the region.” Qatar, the world’s biggest exporter of liquefied natural gas, will use the bond proceeds to provide “contingency funding” for state-owned companies, pay for infrastructure projects, and invest in the international oil and gas industry, according to the bond sale prospectus obtained by Bloomberg News. The Persian Gulf emirate is spending billions of dollars diversifying its economy with acquisitions of stakes in London- based lender Barclays Plc and German carmaker Volkswagen AG. ‘Strong Appetite’ Middle East borrowers will sell as much as $18 billion of international bonds in 2010, Luis Costa , an emerging markets debt strategist at Commerzbank AG in London wrote on Nov. 11. Commercial Bank of Qatar, the country’s second-biggest bank by assets, sold $1.6 billion of bonds on Nov. 10. Dubai last month raised $1.93 billion through the biggest Islamic bond sale from the Gulf region this year, while Tourism Development & Investment Co., a state-owned developer of hotels in Abu Dhabi, raised $1 billion from a five-year Islamic bond issue. “There remains very strong appetite for the region,” said Neil Slee , director of debt syndicate for Eastern Europe, Middle East and Africa at Credit Suisse Group AG, which was one of the lead arrangers for the deal. “It’s a reflection of market confidence in the Qatari credit story” that it was able to close the largest-ever transaction from an emerging market issuer, he said. Qatar’s five-year bonds traded at a yield of 3.81 percent, compared with Dubai’s dollar-denominated Islamic bond with a similar maturity at 6.24 percent. Dubai Dubai, which suffered the worst in the Middle East from the global financial crisis, is struggling to refinance its debt after its government related companies earlier borrowed more than $80 billion to transform its economy into a tourist and financial services hub. Qatar is rated Aa2 by Moody’s Investors Service and AA- by Standard & Poor’s. Dubai is not rated. In addition to the five-year and thirty-year bonds Qatar issued $2.5 billion of 10-year bonds to yield 1.95 percentage points more than Treasuries. Qatar’s sale topped the $5 billion that Venezuela issued in October, according to ING Groep NV. Qatar’s benchmark DSM 20 Index was the third best performer in the world today, surging 2 percent at the close in Doha. The measure has gained 3.5 percent this year, compared with a jump of 74 percent in the MSCI Emerging Markets Index . Standard & Poor’s Ratings Services assigned an AA- rating to Qatar’s bond issue. “The ratings on Qatar are supported primarily by the country’s solid fiscal and external balance sheets, its prosperous economy and strong growth prospects, and its prudent long-term policies,” S&P’s credit analyst Véronique Paillat-Chayriguès wrote in a note today. Qatar Economy Qatar’s economy is expected to grow 9 percent this year and 16 percent next year, ruler Sheikh Hamad Bin Khalifa Al-Thani said on Nov. 3, according to state-run Qatar News Agency. The country is the holder of the world’s third-largest natural gas reserves and a member of the Organization of Petroleum Exporting Countries with 720,000 barrels a day of oil output. Qatar’s 2019 bonds are “cheap relative to ratings,” which is why he holds them, said Peter Eerdmans , head of emerging- market debt at Investec Asset Mangement Ltd. in London. The emirate’s 10-year paper is trading around 185 basis points above Treasuries and the “fair value” for sovereigns with rating in the AA- area is 100 basis point, Eerdmans, who overseas $950 million in assets, said in an interview. The low risk and the better prospects of cash flow generation are “alluring” investors to the Middle East credit where oil and gas producers are benefiting from a surge in crude oil prices, Commerzbank’s Costa said earlier this month. Oil last traded at $79.55 a barrel, up 78 percent this year. Barclays managed Qatar’s sale with Credit Suisse, Qatar National Bank SAQ, Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to the prospectus. To contact the reporters on this story: Haris Anwar in Dubai at hanwar2@bloomberg.net Laura Cochrane in London at lcochrane3@bloomberg.net

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Dubai’s Planned Islamic Bond Sale Gets $6.55 Billion of Bids, Bankers Say

October 28, 2009

By Haris Anwar and Vivian Salama Oct. 28 (Bloomberg) — Dubai’s planned Islamic bond issue attracted bids worth $5 billion for the dollar-denominated offer and 5.7 billion dirhams ($1.55 billion) for the dirham-floating note, bankers involved in the deal said today. The emirate’s five-year fixed rate dollar bond may be priced to yield 375 basis points above the midswap rate, while its dirham Islamic bonds, or sukuk, may be priced at the same spread above the three-month interbank offered rate , according to the bankers who didn’t want to be identified because the sale hasn’t been completed. Dubai and its state-controlled companies are raising funds after they amassed $80 billion of debt during a four-year real- estate boom, which produced the world’s tallest building and largest man-made islands. The global credit crunch had raised concern that the second-biggest sheikhdom in the United Arab Emirates may be unable to meet its debt obligations. “The order book shows that Dubai’s story is gaining credibility,” Chavan Bhogaita , head of credit research at National Bank of Abu Dhabi PJSC, said. “The sukuk format makes sense for Dubai now. There has been a lack of issuance in the Gulf sukuk market in recent months and they want to take advantage of the demand for this asset class.” Islamic debt is governed by Shariah laws barring investors from profiting from the exchange of money, as happens with interest payments on other bonds. Returns from exchanging funds for assets is allowed, as long as gambling, guns and alcohol aren’t involved. To contact the reporters on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net Vivian Salama in Dubai vsalama@bloomberg.net ; or

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