CGI Gulf Insights of the Week (161)

ByCGI Gulf Insights of the Week
Monday, 02 September 2019
Published inSeptember 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Saudi Arabia

Risk Indicator - DB3c
Risk Level - Slight
Ratings Trend - Deteriorating

Falling oil prices over the next ﬁve years will see the government forced to liberalize the economy, opening opportunities for cross-border investment and trade. Longer-term growth will be driven by government reforms under its Vision 2030, which aims to reduce dependence on oil export revenues and boost the private sector.

Market Overview

Cryptocurrency exchange announced AED-based buying and selling
Cryptocurrency exchange Bitbns will now allow UAE-based cryptocurrency traders to buy and sell on the platform using dirhams, the firm has announced. At the moment, only the USDT P2P method is enabled to allow AED deposits and withdrawals. New transactions method will become available in the near future, the company said in a statement. However, only KYC-verified customers will be able to withdraw in AED on the exchange. Those not yet verified will be able to trade and deposit. The company’s statement on the move noted that UAE-based customers will now able to make bracket orders – in they enter and exit the market at the time of their choosing – as well as margin trading, stop-limit orders, margin lending, limit orders, and price alerts. More than 70 cryptocurrencies are currently listed on the exchange. The announcement comes shortly after Bitbns announced a partnership with Malta-based OKEx, which was formerly the world’s largest cryptocurrency exchange in terms of turnover. “We will be assisting each other to grow our reach and strengthen the exchange technically,” the statement said.

Saudis sharpen oil policy focus with energy ministry reshuffle
With oil trading below Saudi Arabia’s break-even level, energy policy is a top priority for the world’s biggest crude exporter. Following the loss of most of his domestic portfolio, Energy Minister Khalid Al-Falih will now have more time to work on balancing the market. Saudi Arabia will split the vast energy, industry and mining portfolio that Al-Falih had run since 2016 into two separate ministries. The reshuffle announced as part of a raft of royal decrees on 30 August, 2019 sees Al-Falih keeping responsibility for energy policy and losing the industry and mining aspects of the role. Al-Falih has been the face of OPEC diplomacy over the past three years as the producer group has sought to counter the rising tide of US shale oil that flooded markets. The ministry reshuffle won’t change Saudi oil policy as the kingdom remains focused on curtailing production to balance crude markets and prop up prices, said Edward Bell, commodities analyst at lender Emirates NBD in Dubai. “This is crunch time now for the next couple of months” as crude suppliers struggle to deal with the US-China trade war and the potential adverse impact on the global economy, Bell said.

Over $1bn investments attracted to Oman industrial city
Oman's Raysut Industrial City has announced that it has attracted total investments of more than OR422.3 million ($1.09 billion). The industrial city witnessed growing investment activity during the first half of 2019, according to Hamad bin Hamoud Al Qasabi, director-general of Raysut Industrial City. He said that a total of 32 investment applications of industrial, commercial and service activities were received during the first six months of the year. Commenting on the OR422 million investment figure, he added: “We are working towards increasing this number further taking into consideration the expansion of the operating companies and factories in terms of space, production lines and capital. "All these factors are promising and reassure that their products are popular in the Sultanate as well as overseas markets.” Al Qasabi also said an infrastructure development project (Raysut 2) is being implemented at a cost of OR4 million on a land area of one million square meters. The project includes the establishment of an integrated network of roads, pavements and drainage network of 7.9km in addition to water network of up to 8.3km that includes irrigation systems and is expected to be completed by the end of 2020. By the end of 2018, total space stood at 3,810,479 sq m, he said, adding that the total workforce had risen to 3,358, of which around 800 are Omanis.

Saudi's Mobily seeks to cut the cost of $2.1bn debt
Etihad Etisalat Co has held preliminary talks with banks to refinance as much SR8 billion ($2.1 billion) of debt as the Saudi Arabian mobile-network operator looks to lower borrowing costs following a turn around in its finances, according to people familiar with the matter. Mobily, as the company is known, has been gauging appetite from lenders to participate in the refinancing and plans to start formal discussions before the end of the year, the people said, asking not to be identified as the information is private. Banks were told that the firm wants to reduce interest expenses with the new facility, they said. Saudi Arabia’s second-largest wireless operator is trying to benefit from four straight quarters of profit growth after accounting irregularities discovered in 2014 led to years of losses. Etihad Etisalat Co has held preliminary talks with banks to refinance as much SR8 billion ($2.1 billion) of debt as the Saudi Arabian mobile-network operator looks to lower borrowing costs following a turn around in its finances, according to people familiar with the matter. Mobily, as the company is known, has been gauging appetite from lenders to participate in the refinancing and plans to start formal discussions before the end of the year, the people said, asking not to be identified as the information is private. Banks were told that the firm wants to reduce interest expenses with the new facility, they said.

Owner of Salt Bae chain plans $890m asset sale to cut debt
Turkish billionaire Ferit Sahenk is ready to sell more of his assets as part of an ongoing effort to satisfy a debt-restructuring deal struck with banks earlier this year. Sahenk’s Dogus Holding AS could dispose of investments worth as much as 800 million euros ($890 million), he said in an interview in Istanbul late on 26 August 2019. Dogus, which has interests spanning restaurants, entertainment outlets, marinas, and car-distribution businesses, wants to cut its 2.3 billion euros of restructured debt to below 2 billion euros this year and to 1.5 billion euros by the end of 2020 through the sales, he said. “We are determining the assets to be sold by making sure that we don’t weaken our position in the sectors that we have operations in,” Sahenk said. “We are keeping our focus on our core businesses. We have observed significant improvements in our cash flows and Ebitda figure this year and had savings of 75 million euros in a short period of time in the group.” The steps could include an initial public offering of Dogus’s hospitality businesses, Sahenk said. The shares of companies affiliated with the investment holding company surged on 27 August 2019. Dogus Otomotiv Servis, the group’s unit that distributes Volkswagen cars in Turkey, rose as much as 7.8% to the highest level since July 16. Dogus Gayrimenkul Yatirim Ortakligi, a real estate developer, jumped as much as 15% to its highest level since June 24.

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