ARAB TIMES, THURSDAY, AUGUST 25, 2011
Airbus to beat 2011 MENA forecasts: exec housing top priority, says Iraq investment chief
Planemaker Airbus will exceed its airlines to place orders at the Dubai June, but instead ordered six air- New housing is Iraq’s top priority in Chairman Sami al-Araji said in an Araji noted that Baghdad was
forecast for orders from the Middle Air Show, Fekih told Reuters in an craft from US competitor Boeing . terms of attracting foreign invest- interview. finalising a master plan to build
East and North Africa (MENA) region interview. Fekih said the company was cur- ment, the country’s investment “We would like to do two things,” 100,000 homes in the Besmaya
this year, helped by deals to be “Discussions with Qatar Airways rently not in discussions with other chief told AFP on Wednesday, as he said. “One, to prepare decent area, east of Baghdad, in a $7.25
finalised at the Dubai Air Show in are underway and it is a continuous regional carriers like Emirates and authorities seek to alleviate major living (conditions) for the citizens of billion deal with South Korea’s
November, a senior executive said. process. Yes, they could announce Eithad Airways. Airlines in the Middle residential shortfalls. Iraq and at the same time get the Hanwha Engineering and
Airbus, which had expected orders something.... a small number of air- East account for about 9.5 percent of Iraq is looking to build one mil- economy moving because it is a Construction, as part of a deal
for 90 planes, will end the year with a craft here or there,” he said. Airbus’s orders, making it a key mar- lion new houses nationwide in the very job-oriented project.” announced in May.
“triple-digit order book”, said Habib The Doha-based carrier had ket for the plane maker. The region, coming years to help reduce Asked if housing was Iraq’s top He said other agreements were
Fekih, the European planemaker’s been expected to buy five A380s which has some of the youngest fleet overcrowding and homelessness priority in terms of attracting invest- in the pipeline as part of efforts to
president for Middle East. and 50 A320neo narrowbody air- in the world, represents 15 percent of and boost employment, National ment from overseas, Araji said: reach the one-million housing unit
Qatar Airways may be one of the planes at the Paris Air Show in the firm’s backlog. (RTRS) Investment Commission “Exactly, at the present moment.” goal. (RTRS)
‘Chinese, Russian contracts are safe’
Libya to honour all Gaddafi oil deals: Jehani
DUBAI, Aug 24, (RTRS): A Libyan lion against Gaddafi’s 42-year rule. of reviving production from the coun- said. Libyan envoys have told Rome that the basis that it might lead to big-tick-
rebel government would honour all the China urged Libyan rebels on try’s oil fields after months of stagna- Meanwhile, with Brent crude above Libya will honour existing contracts in et projects later. And there is a queue
oil contracts granted during the Tuesday to protect its investments in tion. $100 per barrel, foreign entities invest- the post-Muammar Gaddafi era. There of oil players hoping to get their foot
Muammar Gaddafi era, including those North Africa’s biggest oil producing “Luckily, we don’t have much dam- ed in Libya have a strong incentive to is a long history between the two coun- in the door in Libya.
of Chinese companies, Ahmed Jehani, country. age to the oil (installations) other than get production back up and running tries, and Italy’s Eni thinks oil and gas Libya has a clear incentive to resume
a senior rebel representative for recon- Jehani, who chairs the rebel’s Libya what has been reported,” Jehani said. quickly. Italy, one of the biggest flows could resume before winter. pumping oil and it needs foreign
struction told Reuters in an interview. reconstruction team, said Chinese “The most difficult part is how much investors in the North African country, Yet even the countries that support- expertise. But it can afford not to rush
“The contracts in the oil fields are investment and financial assistance pressure you have lost in the oil fields is confident it will be back to business ed or took part in the military inter- into making decisions. The country’s
absolutely sacrosanct,” Jehani told would be welcome to help rebuild the and how do you bring it up again, how as usual. But even once the fighting vention are likely to be vulnerable. net foreign assets, which should be
Reuters Insider TV on Tuesday night. war-torn country. can you clean up the sludge that’s been stops, oil companies can expect a Rebel leaders have said contracts released from the current freeze once
“All lawful contracts will be hon- “We are not making any discrimina- created by the fact that you are not bumpy ride. would be reviewed for signs of cor- Libya is officially deemed “liberated”,
oured whether they are in the oil and tion,” he said. “There will be issues as pumping oil.” Oil majors don’t need much prod- ruption. The transitional government are estimated at around $150 billion -
gas complex or in the contracting... We to how we’re going to have to pay for Jehani said reconstruction efforts to ding to return to a country where may come under pressure to renegoti- enough to cover 37 months’ worth of
have contracts that were negotiated ... this and whether we have the money... bring oil and other industrial infrastruc- pumping oil was highly profitable, ate contracts from a population feeling imports. And even if oil companies
they were auctioned openly ... There’s These are capacity issues in the non-oil ture back to normal would take at least thanks to low production costs. A more it has not fully shared in the country’s manage to hold onto their terms, there
no question of revoking any contract.” sector, in the oil sector you have no nine months. stable and secure environment is key. oil wealth. Libya has tightened terms is no guarantee on the long-term solid-
A spokesman for rebel-run oil firm problem.” “Going back to baseline before the There must also be some sort of effec- on production contracts in recent ity of the Libyan government’s promis-
AGOCO warned on Monday Chinese He said the cost of repairing dam- revolution, I would say if we get it all tive, recognizable government. years. But there is scope for more es. Oil companies hoping to soon get
and Russian firms could lose out on oil aged oil installations would be less of a right, we are probably going to be with- The key question is how the oil severity. Foreign investors were will- back to business as usual may be too
contracts for failing to back the rebel- problem than the technical challenges in the nine months to one year,” he majors will be received in Libya. Rebel ing to accept tough terms in Iraq on optimistic.
Region seen as ‘safe haven’
Low US rates tempt
EU’s embargo on Syrian oil
Gulf bond issuers
DUBAI, Aug 24, (RTRS): Low US yield.
possible next week: diplomat
interest rates and a need for dollar The bid yield on Chile’s sover-
funding will encourage borrowers
in the Gulf to defy volatile global
eign 2020 bond was 3.0884 percent
on Wednesday. Abu Dhabi is rated
‘Syria economy hit by demos but not collapsed’
markets and issue bonds after a one notch higher than Chile.
summer lull, as investors eye Dubai is a much more volatile BRUSSELS, Aug 24, (Agen-
decent returns for relatively low market than the rest of the Gulf as cies): European Union govern-
risk. the emirate is still to fully emerge
ments are likely to adopt an
Gulfsands moves to clarify Assad regime links
Gulf bonds in recent weeks have from a debt crisis and a property
benefited from “flight to stability” market slump. That has led to a embargo against imports of
trades and strong regional bids on
While developed economies face
the risk of renewed recession, the
selloff in Dubai corporate bonds,
leading to widening spreads.
Dubai-based Emirates airline’s
5.125 percent 2016 bond was
Syrian oil by the end of next
week to ratchet up pressure on
President Bashar al-Assad, an
EU diplomat said on
‘Relationships at arms-length’
energy-producing economies of the yielding 5.446 percent on LONDON, Aug 24, (RTRS): Oil com- required by pertinent laws and regula- payments and voting rights pertaining
Gulf Arab region are forecast to Wednesday, up from 4.839 percent Wednesday. pany Gulfsands Petroleum Plc moved to Makhlouf’s stake in the company
tions,” Gulfsands said in a statement.
grow around 4 percent this year, on Aug 1, but down from 5.643 The bloc’s 27 governments agreed to clarify its links with Syria’s Assad The European Union put Makhlouf following the imposition of sanctions.
and Qatar is poised for a 16.7 per- percent on Aug 11. last Friday to explore new sanctions regime on Wednesday as it sought to and 12 other Syrian officials on its “Gulfsands is fully compliant with all
cent expansion due to its gas Stuck against Assad in response to his five- defuse media speculation and pres- sanctions list on May 17 in response applicable sanctions and is committed
exports. “Middle East/North Africa, Gulf month crackdown on pro-democracy sure group criticism about its activities to a crackdown on pro-democracy to continuing compliance with any
Analysts say demand is particu- demonstrators, in which the United in the conflict-torn country. protests against President Bashar al- sanctions that may apply from time to
debt have been stuck in an odd In a statement Gulfsands said it Assad’s authoritarian rule. Makhlouf time,” the company said.
larly strong for sovereign or state- state of external fear and tentative Nations says 2,200 civilians have
was compliant with sanctions and had owns Syria’s largest mobile phone The company said it released the
linked issues from Qatar and Abu trading of late. The recent volatility been killed. kept its relations with Assad’s cousin statement in the light of recent sanc-
Dhabi. A round of discussions was held in company, Syriatel, and several large
creates opportunities for emerging Remi Makhlouf, who owns a 5.7 per- construction and oil firms. tions against Syria and press specu-
Both states — rated AA — are market credit, though, with global Brussels on Monday, the diplomat said, cent stake in Gulfsands via his invest- lation over its relationship with
seen as regional safe havens amid and EU capitals raised no objections. ment company Al Mashrek, at “arms- Advice Makhlouf.
growth estimates down and equi-
political upheaval in the wider ties markets struggling,” said John “The whole process could be complet- length”. Other links detailed by Gulfsands London-based campaign group
Middle East, and offer attractive ed by the end of next week if all goes London-listed Gulfsands said it had include the rental of offices in Platform called last week for an inves-
Bates, head of fixed income at asset according to plan,” the diplomat said, Damascus from a Makhlouf-owned
yields compared to bonds in other had “constructive commercial rela- tigation into Gulfsands’ relationship
manager Silk Invest. speaking on condition of anonymity. tionships” with interests linked to firm and the payment of around $1 with the Assad regime.
regions. If the Gulf’s primary market An oil embargo would constitute a Makhlouf since it first entered Syria in million in fees and milestone pay- Shares in Gulfsands have more
“I think with the expected does re-open after the religious hol- ments to Ramak, another Makhlouf
pipeline of new issues in the major step for the EU, where several gov- 2000. than halved since March on worries
iday of Eid in early September , ernments have been reluctant so far to “All such relationships have been company, for providing advice on about its Syrian operations and the
region, and the current low rates’ investors are likely to target sover- target Assad’s oil industry because of conducted on arms-length commer- identifying and pursuing exploration possibility that the EU could follow the
environment in the US, regional eign issues or top-tier financial concerns over potential damage to their cial terms, have been properly docu- opportunities in Syria. United States by banning the import
borrowers will still come to the institutions’ or government-related commercial interests. mented and have been disclosed as Gulfsands said it had suspended all of Syrian oil products.
market in the fall to take advantage credits. Syria produces about 400,000 barrels
to tap the available liquidity,” said “It depends on the names,” says of oil a day, exporting most of about
Adnan Haider, head of fixed a Gulf-based analyst. “If you’ve 150,000 barrels per day to European hard by five months of anti-government economy will contract by three percent, May, against 20,000 in March, and over-
income at Abu Dhabi Commercial good names, and companies that countries, particularly the Netherlands, protests, could survive unrest and sanctions and tourism, which accounts for 12 per- all imports have halved compared to last
Bank. are highly strategic for the govern- Italy, France and Spain. into next year but experts and officials cent of GDP and 11 percent of employ- year, according to a European diplomat,
Pegged ment... foreign money will jump on In its latest round of sanctions, the EU warn of a sharp deterioration afterwards. ment, is sharply down. who spoke on condition of anonymity.
imposed asset freezes and visa bans on 15 The protests, which have rocked much The overall number of investment By contrast, building materials are
All Gulf currencies are pegged to it. Money is looking at assets back- projects, meanwhile, are down 47.84 per-
the US dollar except the Kuwaiti up.” Syrians on Monday, including senior mil- of the country since mid-March, have booming because, with police occupied
itary intelligence and police officials. dramatically slowed economic activity, cent in the first half of 2011 compared to by widespread protests, unsupervised
dinar, which is pegged to a basket Sukuk, or Islamic bonds, and pri- with analysts predicting negative eco- the same period of 2010, according to construction is on the rise. Street vendors
of currencies. marily short-dated paper, will also Banned
nomic growth in 2011 as a result of a official figures. are also doing well for similar reasons.
So far this year bond issues by be more successful than 10 year- Five institutions, including military and To make matters worse, the population
air force intelligence agencies, were added decline in tourism and investment. For the moment, the economic decline
Abu Dhabi Investment funds plus tenors, driven by strong “During the first three months of the are now only buying the bare necessities has not spread to the currency, as the
Mubadala Development Co and regional bids if global markets to a list of entities that EU companies are because of a fear of the unknown, accord-
banned from doing business with. revolt, everything stopped because con- Syrian pound is down just eight percent
International Petroleum Investment remain jittery. sumers were stunned,” said Abdul Ghani ing to Naji Shawi, who heads the Shawi against the US dollar since mid-March.
Co (IPIC) have been heavily over- Abu Dhabi’s First Gulf Bank The EU diplomat said there was still Group.
no agreement among EU capitals on new Attar, vice-president of Attar Group, a Syrian central bank governor Adib
subscribed. attracted $3.8 billion in orders for a Syrian conglomerate with investments in Involved Mayalheh last week took increased steps
In June, an Abu Dhabi debt offi- $650 million sukuk at the end of criteria that would allow the EU to broad-
en existing sanctions that target specific hotels, finance, pharmaceuticals and The turnover of the Shawi Group, to limit foreign exchange transactions,
cial said the emirate was likely to July. office equipment. which is involved in food, pharmaceuti- and the country still has around $17 bil-
issue an international bond in the Several Middle East issuers companies in Syria with asset freezes.
Last week, governments agreed to dis- “Since June, economic activity has cals, cleaning products and finance, is lion in reserves.
next 6-12 months. decided to hold off selling bonds in cuss ways to include sectors such as resumed, but is down about 40 percent down between five and 10 percent com- “They are probably lower now but in
Qatar Islamic Bank aims to raise the run-up to Ramadan, as widen- banking, telecoms and energy in EU from a year ago.” pared to last year, he said. all cases we have no clear data on that,”
up to $1 billion via an Islamic bond ing spreads made issuing debt more measures banning European companies The 32-year-old continued: “For the “Until now, the business sector is sur- said Jihad Yazigi, editor of the Syria
this year, and several Gulf compa- expensive. Of these, Abu Dhabi’s from doing business with targeted firms. moment, the private sector, which repre- viving, but if this crisis continues for Report economic newsletter.
nies have sought approval for bond Dolphin Energy and its Tourism “There is uncertainty about the exact sents 70 percent of GDP, has survived, more than six months, there will be prob- “Also, at least half of the budget goes
programmes this year, including Development and Investment Co scope (of the new criteria),” the diplomat but if the situation does not improve next lems,” he said. to investment expenses, so the govern-
Oman’s Bank Muscat and (TDIC), were in the market for 10- said. year, the economy will really suffer. Syria’s main stock market has plunged ment could very well decide to skip most
Commercial Bank of Qatar. year paper. Discussions have been hampered by There is a risk of layoffs.” 40 percent since mid-March and con- investment expenses (actually it has
Given limited primary issuance Another was Dubai-based mall concerns over how to structure the EU Even now, Syria’s economic indicators sumption is markedly lower, with cloth- already partly done so) and use that for
during Ramadan and summer holi- developer Majid Al Futtaim (MAF) sanctions without risking a legal chal- paint a grim picture. ing and electrical stores in Damascus current expenses, i.e. salaries, running
days in Europe, secondary market Holding, a first time issuer. lenge by their targets. The Washington-based International lying bare. overhead,” he added in an emailed
activity is an indication of investor Daniele Vecchi, senior vice pres- Meanwhile, the Syrian economy, hit Institute of Finance predicts the country’s The country imported just 2,000 cars in response to questions.
interest. ident for group treasury at MAF
“Middle East markets have held Holding, said MAF would watch
up on the whole — there have been
ups and downs in Dubai names, but
markets for an opening.
“We are always ready to go as
Libyan rebel sees ‘normal output’ by 2012
Qatar and Abu Dhabi have held long as the market is favourable,”
up,” said Haider.
Prices on sovereign and govern-
ment-related bonds in Qatar and
Abu Dhabi have continued to rise,
said Vecchi. “It is difficult to know
where the market stands until way
after Ramadan and when European
investors are back.”
OPEC cut unlikely early in Libyan restart
some to historical highs. These Regional borrowers could also LONDON, Aug 24, (RTRS): Opec’s Gulf duction to be trimmed straight away once Having provided extra barrels without at Opec’s last meeting in June to increase
bonds are also among the most liq- tap bond markets to refinance debt members are unlikely to reduce oil output Libya returns. a formal Opec decision, they are likely to its output targets.
uid in the region. and fund infrastructure and devel- in the early phases of a restart of Libyan “Let’s see when they completely come reduce their output quietly if they decide It has lifted Opec output to more than
The 6.4 percent Qatar sovereign opment projects. supplies, because it is unclear how long a back with their output before the crisis. there is too much oil in the market. 30 million barrels per day (bpd) in July,
bond maturing in January 2040 was The International Monetary significant recovery will take, a delegate And then, Opec will see whether it affects Iran, Opec’s current president and a the highest this year, according to Opec
quoted at 123.50 on Wednesday Fund estimates both Dubai and from a Gulf Opec country said on prices or stocks, and then it will take the price hawk, also appears not to be wor- estimates, entirely offsetting the loss of
versus 102.50 on March 15. The Abu Dhabi have refinancing needs Wednesday. right decision,” the delegate said. ried about the health of the market. Its Libyan oil.
6.75 percent Abu Dhabi 2019 bond of about $30 billion to 2012, and While Muammar Gaddafi abandons “We can’t say now what Opec will do. Opec governor Mohammad Ali Khatibi Libya pumped 1.6 million bpd before
was at 122.30 — yielding 3.409 Qatar will soon need to prepare for his Tripoli stronghold and rebels hail the Are they going to take one month, three said on Tuesday Opec does not need to the war, almost 2 percent of world supply.
percent — up from 113.75 in the 2022 soccer World Cup. end of his rule, the oil industry is weigh- months, a year?” hold an early meeting for now. Oil executives and analysts say some of
March, according to Thomson “For any potential issuers from ing the implications of a restart of Libyan Opec may not make a decision until its More views from Opec on the Libyan that could resume within months after
Reuters data. this region it is a very challenging supplies, which have slowed to a trickle next meeting in December, suggested the restart are likely to emerge in early peace is established, while reaching pre-
Compared with other emerging time and the timing of any bond during the conflict. delegate, a government official who is September. Many officials are away due war output would take a year or more.
debt, AA-rated South Korea’s 2019 issue will be key,” said Chavan Extra oil from Saudi Arabia and other not authorized to speak on the record. to the Muslim holy month of Ramadan, A senior Libyan rebel representative
maturity yields 3.341 percent cur- Bhogaita, head of markets strategy Gulf members of the Organization of the The group’s Gulf members Saudi which is expected to end around Aug 31. for reconstruction, Ahmed Jehani, in an
rently versus the 4.074 percent that at National Bank of Abu Dhabi Petroleum Exporting Countries has Arabia, Kuwait, the United Arab The supply boost from Opec’s Gulf interview with Reuters on Wednesday,
Abu Dhabi’s Mubadala 2019s (NBAD). helped to offset the loss and contained a Emirates and Qatar are typically the 12- countries came after other members said efforts to bring oil and other infra-
surge in crude prices. member organisation’s most moderate on including Iran, African countries and structure back to normal would take at
The Gulf delegate saw no need for pro- prices. Venezuela blocked a Saudi-led proposal least nine months.