CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Monday, 15 April 2019
  • Published inApril 2019
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Country Risk Update - Oman

Risk Indicator  - DB4c
Risk Level       - Moderate
Ratings Trend - Stable

Fitch is the second rating agency to cut Omani debt to junk status, with public finances remaining highly geared to volatile oil prices. The government is targeting high-end tourism as an area for growth. Oman is participating in the latest round of OPEC-led oil production cuts. These supersede those introduced in January 2017 which were loosened in H2 2018, contributing to a sharp downturn in oil prices.
Market Overview
Saudi Arabia's PIF said to seek a bridge loan of up to $8bn
Saudi Arabia’s sovereign wealth fund has started preliminary talks with banks to raise a loan expected to be between $5 billion and $8 billion as it seeks funding for new investments to diversify the kingdom’s economy, people familiar with the matter said. The Public Investment Fund, or PIF, is looking for a bridge loan that will be fully underwritten by lenders and would be repaid with proceeds from the $69.1 billion sales of its stake in Saudi Basic Industries Corp. to Saudi Aramco, the people said, asking not to be identified because the information is private. Talks with banks are still at an early stage and the final size of the loan will depend on their response, the people said.  A spokesman for the PIF said its funding strategy includes “four sources of finance, including capital injections and asset transfers by the government, retained investment returns, and loans and debt instruments.” He declined to comment further. PIF is a central part of the government’s effort to wean the economy away from oil under a plan known as Vision 2030. The fund aims to control more than $2 trillion by that date and currently has assets of about $290 billion, according to data from the Sovereign Wealth Fund Institute. Last year, it raised $11 billion from a group of international banks in its first-ever borrowing.
UAE gold prices fall, but buyers are in for another rate this week
Gold jewelry buyers in the UAE are in for some bargains if they feel like popping into the shops on 14 April 2019, as the precious metal has recently slumped to its lowest level in two weeks. Gold inched lower on 12 April 2019,  after falling below the key $1,300 level the day earlier, owing to the rise of the US dollar. Spot gold was trading at $1,290.7 per ounce as of 3:30 pm. For those looking to buy new jewelry in the UAE, 24-karat gold can now be had for Dh156.25 per gram, cheaper by Dh3.50 per gram compared to its recent peak last March 21, the latest price list from the Dubai Gold and Jewellery Group showed. Buyers of 22K, 21K and 18K gold can also expect to spend less, with retail prices set at Dh146.75, Dh140 and Dh120 per gram, respectively. Overall, gold fans in the UAE could save approximately Dh122 for every 35-gram jewelry, if they buy o 14 April 2019. For those who are waiting for more price declines, however, there isn’t any assurance that the precious metal would hit another major slump this week. Some analysts said that gold could regain its lustre if the central banks continue to give dovish signals, and if that happens, prices at the souk and malls in the UAE could again go up.“Major central banks like the US Federal Reserve and European Central Bank (ECB) are on the dovish path and this is good for a non-fiat asset like gold. In fact, bets for a rate cut in the United States for later part of the year have increased significantly,” said Vijay Valecha of Century Financial. He had earlier predicted the price of 24K to rise to 158.70 per gram. In the latest gold survey conducted by Kitco, more than half of professionals in Main Street (53 per cent) are betting on the precious metal to rise again this week.
Lebanon said to plan $2bn eurobond issue
Lebanon is planning to issue eurobonds that could be in the range of $2 billion, said Talal F. Salman, economic adviser to the Lebanese Ministry of Finance. The debt’s maturity is expected to be 10 years or more and the “timing will probably be the end of May or June,” Salman said in an interview in Washington on 13 April 2019, where he’s attending spring meetings of the International Monetary Fund and World Bank. “We’re waiting now for some good news coming out of the budget that has austerity measures; we believe this will improve yields even further,” he said. “After that, we’re planning to execute the deal.”  The country sent a request for proposal, or RFP, to banks, and the biggest buyers are expected to be Lebanese banks, he said. “International buyers are waiting for good news before they commit to any transaction and with the electricity plan they’re definitely more interested now,” Salman said. Lebanon’s cabinet on April 8 approved a plan to overhaul its electricity industry that could potentially save hundreds of millions of dollars a year and improve investor confidence in the nation’s struggling economy. The country is planning to cut its budget-deficit-to-GDP ratio to 9 percent in 2019 from last year’s 11 percent, Salman said. “The main cuts are coming from general transfers, some procurement items, and NGOs,” he said. He vowed that the government will not cut its salary scale.
UK investment firm says UAE buyers unfazed by Brexit
UK investment property companies are maintaining their focus on the UAE market despite Brexit uncertainties, with one major player targeting UAE-based buyers at Cityscape Abu Dhabi. Salboy Ltd, which specializes in private equity investment, property development, and construction, is currently investing heavily in the regeneration of the UK city of Manchester in light of the Northern Powerhouse initiative by the UK government to boost the local economy by investing in skills, innovation, transport, and culture. The firm said it believes that UK real estate products will resonate well with regional buyers and argued that UAE-based investors remain unfazed by political developments in Britain.  “Attendees at Cityscape Abu Dhabi are knowledgeable, experienced and curious about the best way to expand their UK property portfolios,” said Kevin Eyres, sales manager, Salboy Ltd. “We are bringing to the exhibition our portfolio of developments through our construction company, Domis Property Group, which has already proven to be a big hit with investors. “Past experience tells us that a good investment opportunity from a developer with a notable track record in an up and coming UK city is incredibly attractive to Cityscape Abu Dhabi attendees. We anticipate that this year will be no different as we have an outstanding offering.” 
Abraaj CEO charged with fraud in US after Dubai firm's collapse
Two former executives of The Abraaj Group, which collapsed last year in the world’s biggest private-equity insolvency, have been arrested on US charges of defrauding investors, with one defendant nabbed after arriving in New York with his wife and son to look at colleges. Arif Naqvi, the founder, and ex-chief executive officer was arrested on 10 April 2019 in UK and is awaiting possible extradition to the US. Mustafa Abdel-Wadood, a former managing partner, was apprehended on, 11 April 2019 in New York and remained in a federal lockup.  “The government moved forward because this defendant was present in the US this week unexpectedly,” Assistant US Attorney Andrea Griswold said in a hearing in Manhattan. Abdel-Wadood pleaded not guilty and is due back in court on April 18. A graduate of American University in Cairo, with a master’s degree from Georgetown University in Washington, Abdel-Wadood was arrested at his hotel while in New York to shop for colleges for his son. His lawyer Benjamin Brafman declined to comment after court and wouldn’t say what schools the family was looking at. A lawyer for Naqvi in Dubai didn’t immediately return an email seeking comment on the charges.  But last year Naqvi surrendered control after it was revealed that the firm’s main revenues hadn’t covered operating costs for years. Abraaj, which managed almost $14 billion, was forced into liquidation in June after a group of investors, including the Bill & Melinda Gates Foundation, commissioned an audit to investigate the alleged mismanagement of money in its healthcare fund.
Commodity Tracker
Business Events this Week In UAE
​BICSI Middle East and Africa Conference
@ Dubai World Trade Centre 
Date: 16 April - 18 April 2019
Business Updates

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