Middle East Business Review

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A spokesperson for Dubai International Capital, on condition of anonymity, announced the investment fund has reached a deal with creditors to renegotiate terms on $2.4 billion worth of debt. DIC is part of Dubai Holding conglomerate, an entity controlled by Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum. The emirate has been seeking new terms on loans worth tens of billions of dollars in state-linked debt since financial crisis swept Dubai two years ago.

Meanwhile, Dubai Drydocks, the shipbuilding arm of indebted Dubai World, is facing huge challenges to reach out an agreement for restructuring its $2.2 billion debt pile after missing out a payment deadline for a $1.7 billion three-year loan facility taken back in October 2008. “We are working with all our lender across the board and hopefully we can come up with a solution. We are in serious discussions and we are committed to completing the restructuring in a fair manner,” Khamis Juma Buamim, chairman of Drydocks World, told Reuters on Sunday.

Emirates NBD, Dubai’s largest bank in terms of assets, is weighing up its options to launch Islamic bond, or sukuk, banking sources said on condition of anonymity, adding that a list of seven or eight banks which will manage the sale. Financial sources in Gulf believe Emirates NBD has privately sold around $500 million worth bonds to European investors so far in 2011.

On the other hand, Bloomberg reported that investment in Emirates, world’s largest airline, is safer than Government of Dubai, its owner. According to data published by Bloomberg, the extra yield investors demand to hold Dubai’s 6.7 per cent dollar bonds due October 2015 over Emirates 5.125 per cent US currency notes maturing in June 2016 widened to 70 basis points, or 0.70 percentage points, on November 25, the most since the state-owned carrier sold bonds in June.

Gulf Cooperation Council of six nations witnessed a staggering boost of 40 per cent in trade surplus with Japan thanks to a sharp rise in oil prices. Figures released by Japan External Trade Organisation (JETRO) showed exports from GCC shot up to nearly $104.3 billion in the first 3 quarters of 2011 compared to $74.5 billion in first 3 quarters of 2010. On the other hand, Japan’s exports to the Gulf bloc declined from $14.99 billion to $13.6 billion during the same period.

According to Ernst & Young’s new quarterly ‘Rapid Growth Markets Forecast’, Egypt, Qatar, Saudi Arabia and the UAE are among the world’s 25 economies that are set to grow on a rapid rate. The report said Qatar had the highest nominal GDP (US$) per capita at PPP in 2010 among the 25 RGMs, followed by the UAE. Qatar has also been the fastest growing economy in over a decade, with an average growth of 13% per annum, followed by Egypt’s average growth of 4.9%, the UAE at 4.3% and Saudi Arabia at almost 3.2%.

Middle Eastern economists suggest political turmoil in Egypt and Syria has resulted into a reduction in the number of remittances from a number of oil-rich countries including the Kingdom of Saudi Arabia. Around 5 percent of Egyptian residents in the Kingdom have stopped sending their money home due to the political ambiguity currently prevailing in the country, economic expert Taha Kosbah told Arab News. Farooq Al-Khateeb, a senior economics professor at King Abdulaziz University said turmoil in Syria has led to a dip in remittances by 20 per cent as people are investing their money in resident countries instead of sending back home.

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