HSBC says Gulf states face $94 billion in debt 

Gulf Cooperation Council (GCC) countries may struggle to refinance $94 billion of debt over the next two years as the region faces slowing growth, HSBC Holdings Plc has said. GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates (UAE) and Qatar, HSBC said in. The countries also face a fiscal and current account deficit of $395 billion over the period. Gulf countries have about $610 billion outstanding in foreign exchange denominated bonds and syndicated loans, HSBC said. This includes financial, corporate, and sovereign debt, mainly in the UAE. Bahrain, and Qatar. HSBC is confident that the funding gaps will be covered and expects a “raft” of foreign sovereign bond issuance to fund budget deficits. Any new issuance will have to compete with upcoming refinancing needs, the bank said. Meanwhile, the latest forecast from the Abu Dhabi Commercial Bank (ADCB) says that GCC gross domestic product growth will fall to 2.2 percent in 2016 from 4.1 percent in 2015 due to low oil prices. The ADCB also expects that the GCC countries’ widening fiscal deficits, which are expected to be covered mostly through domestic borrowing, will adversely impact banking sector liquidity in the region. [Bloomberg, 2/28/2016]

 

Saudi says to work with oil producers to limit market volatility

Saudi Arabia will continue to work with all major oil producers to limit market volatility and is committed to meeting global oil demand based on commercial considerations, the cabinet said Monday. In a statement, the cabinet said that Saudi Arabia will continue to invest in its energy sector to maintain its oil production capacity to help meet demand and deal with any disruptions in global oil supply. “The kingdom seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action.” Meanwhile, Saudi Arabia has reportedly drawn up a new strategy to attract US investment as it addresses the impact of low oil prices. “The point is to attract inflows of cash and create jobs, which is why there is a focus on retail and healthcare, which are both labour intensive sectors,” a Saudi banker said. [Reuters, 2/29/2016]

 

Moody’s cuts Oman credit rating two notches before bond issue 

Moody’s Investors Service sharply cut Oman’s sovereign credit rating on Saturday citing damage to state finances from lower oil prices. The move comes weeks before the Oman plans to launch its first international bond issue in nearly 20 years. Moody’s lowered Oman by two notches to A3 and kept the rating on review for a further downgrade, noting that Oman has fewer financial reserves than other Gulf countries to cope with an era of cheap oil. “Oman has a comparatively weaker asset cushion, with government financial assets amounting to only about three years of spending,” the ratings agency said. Oman’s current account deficit will reach almost 25 percent of gross domestic product (GDP) in 2016, improving slightly to 16 percent of GDP by the end of 2018, Moody’s said. Its new rating for Oman is three notches above an assessment by Standard & Poor’s, which recently lowered the country two notches to BBB-minus, one notch above junk status. [Reuters, 2/27/2016]

 

Egypt to sign soft loans of $575 million with Japan, South Korea

Egypt will sign three concessional loan agreements with Japan and one with South Korea worth a total of $575 million to finance projects in energy and transportation. The deals come amid President Abdel Fattah al-Sisi’s third visit to Asia, which began on Friday. The loans will have interest rates of less than one percent and will be repaid over 40 years with a ten-year grace period, Minister of International Cooperation Sahar Nasr said. Japan’s lending package includes a $155 million loan to expand Egypt’s Borg al-Arab airport, $210 million to increase the efficiency of electricity distribution companies, and $95 million to construct a power plant in Hurghada. Nasr said Egypt also aimed to negotiate financing for the Grand Egyptian Museum in Giza. South Korea will lend Egypt $115 million to finance an upgrade of the railway signaling system between the Qena and Luxor governorates in Upper Egypt. On Monday, al-Sisi met with Japan International Cooperation Agency (JICA) President Shinichi Kitaoka to discuss financing for projects in the education and energy sectors. [Ahram Online, DNE, 2/28/2016]

 

Egypt launches investment scheme to lure expat dollars

Three state-owned Egyptian banks will offer US dollar-denominated certificates to Egyptian expatriates at a minimum subscription price of $100 in an attempt to attract dollar savings, Immigration Minister Nabila Makram Ebeid said Monday. She said the dollar-denominated “Belady” certificates “come to answer the request of Egyptians abroad to use their savings to help their country’s economy.” The National Bank of Egypt, Banque Misr, Banque Du Caire will offer maturities of one, three and five years, with yields of 3.5 percent, 4.5 percent, and 5.5 percent, respectively. The Central Bank of Egypt will guarantee the right of investors to repatriate the yields they earn in dollars to banks abroad. The certificates will be available starting Tuesday and are being offered at higher yields than typical market equivalents to encourage expatriates to invest. [Reuters, Ahram Online, 2/29/2016]

 

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