Companies in Abu Dhabi and other stable Gulf areas are likely to enjoy smooth access to financing even as political turmoil sweeps across much of the Middle East, Islamic finance executives said yesterday.
Along with Qatar, the Abu Dhabi Government is the most highly rated sovereign in the Middle East, ensuring that its companies can raise money cheaply, Raja Teh Maimunah, the global head of Islamic markets at Bursa Malaysia, said at the Global Financial Markets Islamic Forum in Dubai.
"There's no other [regional issuer] that can lend [at "AA"] but Abu Dhabi, especially with the downgrade of Bahrain," she said. "Yields unfortunately have spiked, but we need stable jurisdictions like Abu Dhabi."
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Editor's Pick - Central Bank targets fees and lending practices
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Both Fitch and Standard & Poor's, the credit ratings agencies, rate Abu Dhabi as "AA", while Moody's rates the emirate "Aa2". Ratings agencies downgraded Bahrain last week.
Abu Dhabi does not have any traded sukuk on the market at the moment, but some government-related entities may be able to raise money more cheaply when issuing Islamic bonds because of the emirate's financial muscle.
Yields on Gulf sukuk have risen as investors seek to pull out of the Islamic finance market. Average yields have increased 70 basis points since January 25, when Egypt's unrest began, according to the HSBC-Nasdaq Dubai GCC US Dollar Sukuk Index.
Lim Say Chong, an executive vice president of Al Hilal Bank's investment banking group, said the launch of Islamic repurchase agreements, announced by National Bank of Abu Dhabi, would be "very important to develop the market for quality sukuk". The lack of a secondary market for sukuk has until now dissuaded companies from tapping credit markets for new funds, he said.
ghunter@thenational.ae
'Outclassed in Kuwait'
Taleb Alrefai,
HBKU Press
THE SPECS
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On sale: Available for preorder now
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs
Engine: 2.0-litre 4-cylinder turbo
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Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital