Dubai World Seeks Debt Delay, Owes $59 Billion; Default Swaps Soar .... SCHADENFREUDE....

I have to repeat myself More Bad News For Dubai ...... I think after you have finished reading the follwing post & watching the clips it should be clear that the $ 60 - $ 80 billion from Dubai itself is only a fraction of all the bad loans sitting mainly on the regional bank balance sheets ( probably no coincidence that the supervisor aka regional lender of last resort gave some "prudent" accounting advice back in January > How Not To Restore Confidence....."United Arab Emirates Edition" ) .......

Muß mich da wohl erneut wiederholen More Bad News For Dubai ...... Ich denke das jeder der das folgende Posting gelesen und sich die Videos angeshen hat mit mir übereinstimmt das die jetzt im Raum stehenden bis zu 80 Mrd $ die Dubai selbst im Feuer stehen hat nur einen kleinen Teils der Summen ausmachen die ansonsten noch in den wohl überwiegend regionalen Bankenbilanzen ( obwohl man ja unsere Landesbanken nie unterschätzen sollte...;-) schlummern ( sicher kein Zufall das die Aufsicht bereits im Januar dazu aufgerufen hat sich bei der Bilanzierung "verantwortungsvoll" zu verhalten... > How Not To Restore Confidence....."United Arab Emirates Edition" ).....



Dubai World Seeks Debt Delay as Abu Dhabi Provides $5 Billion

Nov. 25 (Bloomberg) -- Dubai World, the government-owned holding company struggling with $59 billion of liabilities, is seeking to delay repayment on all of its debt, even after Abu Dhabi banks provided $5 billion for Dubai’s support fund.

Dubai World will ask all creditors for a “standstill agreement” as it negotiates to extend the maturities of its debt, including $3.52 billion of Islamic bonds due for repayment on Dec. 14 by its property unit Nakheel PJSC, the builder of Dubai’s palm tree-shaped islands, the company said in an e- mailed statement today.

The emirate, home to the world’s tallest tower and the biggest man-made islands, owes $4.3 billion next month and another $4.9 billion in the first quarter of 2010 through government and corporate debt, Deutsche Bank AG data show. Abu Dhabi government-controlled banks, National Bank of Abu Dhabi PJSC and Islamic lender Al Hilal Bank, bought all $5 billion of bonds from the government, Dubai’s Department of Finance said in an e-mailed statement today.

To understand how hyperinflated things are you should take a look at The Upcoming Skyscraper Tsunami & watch at least one of the YOUTUBE clips at the end of the post..........

Um zu verstehen wie größenwahnsinnig die Lage in Dubai ist empfehle ich dringend einen Blick auf The Upcoming Skyscraper Tsunami & zumindest auf einen der YOUTUBE Clips am Ende des Postings zu werfen.....

Dubai, the second biggest of seven sheikhdoms that make up the United Arab Emirates, set up a $20 billion Dubai Financial Support Fund after the credit crisis triggered the world’s worst property crash and hurt its finance and tourism industries. The emirate raised $10 billion by selling bonds to the U.A.E. central bank in February, with some of the money going to property developers.

What a difference a year makes ( see No Kidding.... Dubai May Need Help To Repay Debt....

Welch Unterschied doch ein Jahr ausmachen kann ( siehe No Kidding.... Dubai May Need Help To Repay Debt....

‘Shut Up’

Dubai ruler Sheikh Mohammed Bin Rashid Al-Maktoum said Nov. 9 the emirate’s bond program to raise a further $10 billion will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up.” Abu Dhabi, the U.A.E.’s capital, is owner of the world’s biggest sovereign wealth fund and holds almost all of its oil.

Home prices in Dubai plummeted 47 percent in the second quarter from a year ago, the steepest drop of any market, according to Knight Frank LLC. Property prices may drop further, a survey by Colliers International showed Oct. 14.

Let´s hope the following handsome "gesture" will be enough to please the new overlord.....;-)

Bleibt zu hoffen das die nachfolgende Geste genug sein wird um die neuen Herren im Hause zu weiteren Mrd. zu bewegen.... ;-)

Dubai Autonomy Fades as Crisis Strengthens Abu Dhabi

Nov. 24 (Bloomberg) -- Until last month, a billboard at one of Dubai’s busiest roundabouts featured one photo, of Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum. The new billboard says “Long live our Emirates union” and also shows United Arab Emirates President Sheikh Khalifa Bin Zayed Al Nahyan.

“For the general purposes of the Dubai Financial Support Fund…” FT Alphaville

As FT Alphaville noted the market was on Wednesday digesting news that the $5bn Dubai had raised from two Abu Dhabi government-controlled banks would not go to paying off Nakheel convert bond holders as expected. Instead the proceeds would go towards the general purposes of the Dubai Financial Support Fund (DFSF).

The likes of Barclays Capital, meanwhile, estimate the liabilities could be as much as $72bn, a figure that runs significantly beyond Dubai’s own ability to refinance without support from Abu Dhabi.

In other words, there’s no telling how big the total hole Dubai has to plug is, much less its strategy for doing so, and more importantly how Dubai World bond holders — the government-owned group which owns Nakheel — rank in the fund’s priorities.

On the latter, the indication from today’s news is that they don’t rank highly at all.

CDS report: All eyes on Dubai World FT Alphaville

The Dubai Government announced that it is restructuring Dubai World, an Investment company owned by the government, with immediate effect. It has asked creditors for a six-month standstill on its obligations until at least 30 May 2010.

Spreads throughout the region widened on the shock news. More
volatility can be expected as investors await details of the restructuring

LEX / FT

Dubai’s hopes of becoming a world financial centre are proving to be nothing more than an Ozymandian dream. Wednesday’s unexpected decision by Dubai World, the Gulf emirate’s largest state-owned conglomerate, to impose a six-month debt standstill has foreign creditors up in arms. Earlier this month, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum publicly pledged his support for the group and its obligations. Investors, perhaps foolishly, took him at his word.

The consequences of the standstill, and possible eventual default, are far-ranging. The repayment of Dubai World’s $4bn Nakheel bond was seen as a litmus test for the emirate’s ability to deal with the $80bn owed by the sovereign and its state-controlled companies. The emirate’s willingness to do this is now in doubt, especially as only an hour earlier it raised $5bn from two state-controlled banks in Abu Dhabi. This was only half what had been expected, but followed $10bn of earlier support from the kingdom’s richer neighbour.

Foreign creditors are muttering darkly about taking legal action.

You really cannot make this up..... No Bailout, lets sue them.....

Den Satz muß man sich mehrmals durchlesen... Erst dann wird deutlich in welcher Welt die Bankster in erster Linie wegen der andauernden Hilfe durch den Steuerzahler noch immer leben.....

Dubai shock after debt standstill call FT

Standard & Poor’s and Moody’s Investors Service immediately downgraded the ratings of all six government-related issuers in Dubai following news of the repayment delay and left them on review for possible further downgrade.Moody’s cut ratings on some government-related entities to junk status, while S&P cut ratings on some entities to one level above junk.

UBS: support for Dubai may be less than assumed MW

Analysts at UBS said authorities will not have taken the decision to restructure Dubai World lightly and that there are three potential explanations for the decision. Firstly, UBS said, Abu Dhabi's support for Dubai might be less generous than assumed. "Perhaps Abu Dhabi has forced Dubai to tackle the problem of excessive corporate debt 'in-house' first before extending more financial support," the broker said.

A second possibility is that corporate-sector problems might be more severe than assumed, UBS said.

Thirdly, Dubai's debt might be higher than the generally assumed $80 billion to $90 billion due to potential off-balance sheet liabilities, it added

Just in time.....

NYT

CSI Dubai FT Alphaville



Some Dubai World Unit Creditors Form Group WSJ

Among options bondholders are exploring is the possibility of seizing Dubai land that is being used to secure the bonds. But Julian Lim, a London-based bond analyst at Nomura, says there are question marks over the value of the land backing the bonds. In addition, it is unclear whether bondholders would even be able to seize the property given that local courts may consider those assets sovereign entities of Dubai, he added.

Detailed Debt & Maturity Profile Dubai, Abu Dhabi & UAE ZH

A Financial Mirage in the Desert NYT

Quantifying External UAE And Dubai Loss Exposure ZH

"Kreditgetriebene Fata Morgana" Querschüsse

Dubai's dramatic boom over the last decade in pictures Telegraph

FACTBOX - What assets Dubai could be forced to sell Reuters

Total Eclipse At The Heart Of Dubai’s World Edward Hugh

The question is, of course, now that the emirate’s lop sided growth model has been shown to be completely dysfunctional, what are the viable long term business prospects in a city with so much excess capacity as far as property goes. According to the Dubai Statistics Center, the total population was 1,422,000 as of 2006, of which 1,073,000 were male and only 349,000 were females.

Evidently activity associated with the construction industry can offer some part of the explanation for this massive gender imbalance. Just under 20% of the population are estimated to be UAE nationals. Approximately 85% of the expatriate population (and 71% of the emirate’s total population) is thought to be Asian, chiefly Indian (51%), Pakistani (15%), Bangladeshi (10%). This impression of a large construction industry oriented population is reinforced by the economic data

Real estate and construction account for about 23% of GDP and financial services for another 11%.

Dubai Cartoon Telegraph :-)

Dubai Bubble Burst Youtube

Die Finanzkrise erreicht Dubai Youtube ( German/Deutsch)

Geschichte von Dubai / UAE ARTE via Youtube

Dubai Real Estate CrashYoutube

DUBAI = LAS VEGAS/SILICON VALLEY ON STEROIDS!

More Bad News For Dubai ......

Time for another update from Dubai...... Compared to The Upcoming Skyscraper Tsunami the rotten performance of their SWF is only a minor problem...... But it seems that almost everything Dubai pushed forward during the past few years is running into trouble...... Clearly a poster child for the bubble years......

Es ist mal wieder Zeit für ein Update aus dem vermeintlichen Wunderland Dubai....... Sieht so als fast alles was die dort anfassen wirklich nur auf Sand gebaut ist...... Verglichen mit dem Upcoming Skyscraper Tsunami ist die lausige Performance des SWF wohl aber nur ein winziges Problem...... Dubai ist sicher das Paradebeispiel für die Bubble Jahre. Was hier an Gigantismuß in den Wüstensand bzw. auf künstlichen Inseln versenkt worden sprengt wirklich jeden Rahmen......
Istithmar Said to Halt Investment; Dubai Weighs Sale (Bloomberg)

Istithmar World, the Dubai sovereign wealth fund, is halting investments as part of a restructuring effort after spending more than $25 billion this decade on stakes ranging from a yacht marina to luxury retailer Barneys New York, according to people familiar with the plan.

> I just couldn´t resist.... via Istithmar World

> Konnte hier einfach nicht widerstehen.... via Istithmar World

Retail Deal of the Year for 2007 for acquisition of Barneys New York (2007) Investment Dealers Digest

Istithmar World Capital Announces Additional Capital Support For Barneys New York 2009

"Istithmar World Capital has provided a significant level of additional capital to support Barneys New York. Working closely with management, we believe that this amount allows the company financial flexibility to work with the company's major vendors and financial intermediaries.

> With deals like this no wonder Istithmar has won several awards..... ;-)

> Dank solch gelungener Deals ist es kein Wunder das Istithmar mit Preisen überhäuft worden ist.... ;-)

Best Private Equity House (2008) Banker Middle East

Best Private Equity House Award (2007) Banker Middle East

> Surprising to see that the WHITE ELEFANT MGM City Center in Vegas didn´t win a special award..... Update: Video City Center

> Fast überraschend zu sehen das die wohl größte Fehlleistung das MGM City Center in Vegas nicht auch noch einen Sonderpreis abgeräumt hat..... Update: Video City Center

> Back to Bloomberg....

The process may result in a sale of the fund or its assets, they said. Istithmar, run by David Jackson, said this week that co-chief investment officers John Amato and Felix Herlihy would leave the firm. Jackson’s job is under review, the people said.

A restructuring by Istithmar and its parent Dubai World may mark the most public reversal of fortune for a state-controlled investment firm since global credit markets seized up in 2007.

Sovereign wealth funds, fueled in part by oil revenue, have become sources of capital around the world for companies, including Citigroup Inc. and Morgan Stanley.

Istithmar and Dubai World have struggled this year on investments, including Barneys, which may be facing a restructuring or bankruptcy, according to people familiar with the retailer, and CityCenter, an $11 billion project in Las Vegas.

Abu Dhabi, the wealthiest member of the United Arab Emirates, provided a $10 billion bailout this year for Dubai as the emirate struggled to meet payments on $80 billion of debt used to finance real-estate projects. ....

> Won´t be the last time Abu Dhabi will be bailing out Dubai........ What a mess....

> Abu Dhabi darf sich jetzt schon einmal freuen das hier demnächst in regelmäßigen Abständen Bailouts fällig werden.... Sieht immer mehr so aus als wenn hinter den glitzernden Fassaden nur heisse Luft steckt.... Ein gewisses Maß an Schadenfreude kann ich mir da nicht verkneifen.....

UPDATE: Dubai’s Trail of Dud Deals Shows Sovereign Wealth Gone Awry

Dubai investment firm Istithmar World may be the first sovereign wealth fund to liquidate after a $27 billion spending spree financed largely with borrowed money, people briefed on the matter said.

Unlike government-controlled funds in Kuwait and Abu Dhabi, flush with cash from oil production, or in China, backed by export earnings, Istithmar fueled purchases such as the takeover of Barneys New York by borrowing as much as 90 percent of the money, the people said.

Istithmar’s parent, Dubai World, tapped Middle Eastern and European banks including Barclays Plc, Royal Bank of Scotland Group Plc and Deutsche Bank AG, leaving those three with combined debt holdings of at least $1.5 billion, the people said.

“Dubai sovereign wealth funds are leveraged like private equity funds"

Istithmar contributed about $2.5 billion of its own cash to back $27 billion of purchases since 2003, the people said, speaking anonymously because the strategy was private. It used so-called non-recourse bank loans, backed by specific assets, to finance about 75 percent of its acquisitions, one of the people said.

Dubai World is in talks with its creditor banks to restructure at least $12 billion in debt, a person close to the talks said, speaking anonymously because the negotiations are private.

Istithmar or its assets will probably be sold to help its parent repay the debt, the person said. Nakheel PJSC, the Dubai World unit behind a series of palm-shaped, man-made islands on the emirate’s coast, has a $3.52 billion Islamic bond due in December

One example of risky investing, according to Turner, came in 2007, when Dubai World bought about $5.5 billion of MGM Mirage stock at between $82 and $95 without any hedge. The stock now trades at about $12.

Refinancing Dubai’s debt became more difficult with the onset of the global credit crisis as lending froze. It has about $80 billion of outstanding corporate and government debt, according a report by Moody’s in February. That almost matches the emirate’s $82 billion gross domestic product in 2008, the report said.

A Dubai Investment Arm Struggles With Debt Load NYT

Set up in 2003, Istithmar came to be seen as the public face of a brash, acquisitive Dubai, which, unlike more conservative sovereign funds operating in the region, deployed high levels of leverage to finance a shopping spree that included the Queen Elizabeth 2 luxury liner; the department store Barneys New York; a stake in Cirque du Soleil, from Montreal; as well as luxury hotels in New York like the W on Union Square and the Mandarin Oriental on Columbus Circle.

Most of these investments — including that in Perella Weinberg Partners, the investment boutique, and GLG Partners, the asset management company — were done at the top of the market, from 2005 to 2007.

Istithmar was in many respects a scaled-down version of Dubai — using bravado, debt and some dollops of cash to invest in global markets

Dubai Update.....The Upcoming Skyscraper Tsunami.....

Flashback / Rückblende Feb 2009

In February, Dubai announced a $10 billion bond offering. It was fully subscribed by the central bank of the United Arab Emirates, making it essentially a federal bailout. The Dubai government has used the money to help government-related entities pay off debt.

Dubai is calling the deal between of Emaar with a 100 percent state controlled company a merger.....Good joke...They won´t laugh in Abu Dhabi / UAE for sure.....I´m not sure how long Abu Dhabi ( see also No Kidding.... Dubai May Need Help To Repay Debt...., Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) will be "glad" to bail Dubai out..... I assume the next time $ 10 Billion won´t be enough.......

Dubai nennt den Deal zwischen Emaar ( bauen u.a. den modernen Turm zu Babel.... ) und einer anderen Firma die zu 100% im Staatsbesitz zwar eine Fusion. Guter Witz.....In Abu Dhabi / UAE wird man darüber aber wohl kaum lachen ...... Schön zu sehen das der Größenwahn, der nirgends so ausgeprägt gewesen ist wie in Dubai, früher oder später zum scheitern verurteilt ist. Bin gespannt wie lange Abu Dhabi / UAE ( siehe No Kidding.... Dubai May Need Help To Repay Debt.... , Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) noch willens ist Dubai mehr oder weniger vor dem Kollaps zu bewahren.... In jedem Fall werden 10 Mrd $ beim nächsten Mal wohl nicht reichen....... UPDATE: ein aktueller Lagebricht von Guido Mingels / Die Zeit Goodbye, Dubai Tip Top!



Dubai Index Drops Most Since November on Emaar’s Merger Plans
June 28 (Bloomberg) -- Emaar Properties PJSC pushed Dubai’s index to its biggest decline in more than seven months on concern shares of the Middle East’s biggest property developer may be suspended or diluted pending a potential merger.

Dubai-based Emaar dropped 10 percent, the maximum daily limit allowed, after the company said it’s in talks to merge with state-controlled Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC, all units of Dubai Holding LLC.

The new entity will have 13.4 billion dirhams ($3.65 billion) in debt obligations, representing 7 percent of total assets, Emaar said today.

“Investors are worried a merger may mean a long share halt as is the case with Amlak and Tamweel,” said Mohamed Dwaikat, a broker at Al Fajer Securities in Abu Dhabi. “There is also concern about a possible dilution of the shares.” Amlak Finance PJSC and Tamweel PJSC, the United Arab Emirates biggest mortgage firms, haven’t traded since November pending a planned merger.

The Dubai Financial Market General Index lost 6.1 percent, the biggest fall since November, to 1,745.07, trimming the gain for this quarter to 11 percent. Abu Dhabi’s ADX General Index retreated 2 percent, paring this year’s advance to 7.7 percent.

Emaar, which is building the world’s tallest tower and makes up about 20 percent of Dubai’s index,fell to 2.89 dirhams.

Al Mal Capital PSC suspended its recommendation on the company, saying the planned merger could be “potentially dilutive” for Emaar shareholders.

Dubai Holding is a 100 percent state-controlled entity, while the government of Dubai owns about a 31 percent stake in Emaar, Bloomberg data show.

> At least Dubai´s sovereign debt rating is better than Iceland´s............

> Dubai schafft es immerhin Island in Scahen Kreditwürdigkeit zu schlagen.......



> Judging the following project ( see Dubai plans 'moving' skyscraper BBC) i think the term megalomaniac isn´t far-fetched....... I´m pretty sure there is ZERO chance that this "vision" will be build. The following clip is from mid 2008 and clearly a sign how far this bubble has been pumped up....

> Bei Betrachtung der nächsten "Vision" ( siehe Dubai plans 'moving' skyscraper BBC ) ist der Begriff "Größenwahn" sicher nicht zu hoch gegriffen....... Gehe jede Wette ein das dieses Objekt niemals gebaut werden wird. Der nachfolgende Clip ist von Mitte 2008 und zeigt eindrucksvoll welche Aussmaße die Blase zwischenzeitlich angenommen hat.



> Thank god there isn´t a lot of new space coming online .......;-) Now combine the upcoming glut with the sky high price level ( HT Paul Kedrosky )...... DOH! As far as i can see i think not an insignificant amount of the regions SWF will be needed to prop up the banking sector......

> Gottseidank kommt in nächster Zeit ja kaum neues "Material" auf den Markt......;-) Die beste "Medizin" um das bereits jetzt astronomisch hohe Preisniveau ( Dank an Paul Kedrosky ) zu halten..... Denke das ein nicht unwesentlicher Teil der Sovereign Wealth Funds in der Region demnächst benötigt werden um das heimische Bankensystem zu stützen.......

Future Dubai skyscrapers Wikipedia
Under construction Burj Dubai · Pentominium · Burj Al Alam · DAMAC Heights · Princess Tower · Marina 101 · 23 Marina · Emirates Park Towers Hotel & Spa · Elite Residence · Lam Tara Towers · D1 · The Marina Torch · Infinity Tower · Al Yaquob Tower · The Index · HHHR Tower · Ocean Heights · Ahmed Abdul Rahim Al Attar Tower · Central Park Towers · I&M Tower · Dubai Pearl · Sulafa Tower · G-Tower · Mag 218 Tower · Acico Twin Towers · Marina Pinnacle · Khalid Al Attar Tower 2 · Vision Tower · Ubora Commercial Tower · Conrad Dubai · Metro Tower · Al Tayer Tower · Churchill Towers · Sama Tower · The Buildings by Daman · Rolex Tower · Anantara Towers · Tiara United Towers · Al Bateen Tower · Trident Grand Residence · Latifa Tower · Executive Towers · Grosvenor House The Residence · Concorde Tower · Platinum Tower · Dubai Jewel Tower · Jumeirah Bay · Sidra Tower · Dubai Tower · Tiffany Towers · Silver Star · The Bay Gate · Dubai Islamic Bank Tower · Jumeirah Al Khor Residence · Pier 8 · Iris Bay · Liberty House · Goldcrest Executive · Dubai Gate 1 · The Prism · AG Tower · AU Tower · Lake Point Tower · Swiss Tower · Goldcrest Views 2 · The Residences · Silverene · Dubai Arch Tower · Laguna Tower · Verde Residences and Offices

Approved Dubai Towers Dubai · Lighthouse Tower · Al Sharq Tower · The Skyscraper · Al Hekma Tower · Providence Tower · The Palm Trump International Hotel & Tower · Abjar Tower · Nili Tower · ARY Digital Tower · Boraq Tower · The Sheffield Tower · Fortune Araames · Duja Tower · El Matador Tower · Arabian Crowne · Mag 220 Tower · The Dome · Jumeirah Business Center 1 · The Prime Tower · The Forum

Proposed Dubai City Tower · Nakheel Tower · Anara Tower · 1 Park Avenue · Meraas Tower · Marina Sky Towers · Marina 106 · Dynamic Tower · P-17 · The Wave Tower · Signature Towers · His Highness Sheikh Hasher Tower · Beachfront Tower Hotel · Beach Towers · Time Residences · Al Ghaith Tower

> I doubt that even one proposed or approved object will be realized.... Wouldn´t surprise me if we see will something similar what happened in Bangkok ......

> Von den genehmigten bzw. angedachten Projekten wird sicher kaum eines je verwirklicht werden..... Denke es grenzt bereits an ein Wunder wenn die bereits im Bau befindlichen Objekte fertiggesetllt werden.....Könnte leicht passieren das sich ähnliches wie in Bangkok wiederholt......

I Want My Buyback Back Daimler Update... Buy Sky High & Selling At Record Low To Abu Dhabi

I´m still suffering a flu so the posting will continue to be light but this one is just too good to slip through..... Unfortunately i was spot on in my judgement on the incompetence of Dailmer´s management ( see How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ). Also no surprise to see the media here in Germany applauding the move not mentioning the failure of Zetsche € Co......

Bin gesundheitlich immer noch etwas angeschlagen und werde daher auch diese Woche blogtechnisch etwas kürzertreten. Dieses Meisterstück von Daimler verdient aber zumindest ein paar Minuten Aufmrksamkeit und Häme. Schadenfreude kann selbst ich bei soviel Inkompetenz nicht mehr aufbringen. Leider hatte ich mit meiner Einschätzung ( siehe How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ) Recht und es bleibt zu befürchten das Leute wie Zetsche von den deutschen Medien für diesen "Schachzug" auch noch gefeiert werden ( siehe FT Deutschland , FAZ , Spiegel Experten loben Daimler für Abu-Dhabi-Deal).


Daimler Sells Aabar a 9.1% Stake for $2.7 Billion March 22 (Bloomberg) --

Daimler AG, the world’s second- largest maker of luxury cars, will sell 1.95 billion euros ($2.7 billion) of shares to Abu Dhabi’s Aabar Investments PJSC, raising cash as it grapples with the deepening global recession and gaining a long-term shareholder.

Aabar will buy 96.4 million new Daimler shares for 20.27 euros apiece, the Stuttgart, Germany-based automaker said in a statement today. The price equates to a 5 percent discount to Friday’s close of 21.34 euros.

Now the "glorious" history of buybacks taken from How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... JUST BRILLIANT!

Nachfolgend nun die ruhmreiche Auflistung der Aktienrückkäufe ( siehe How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ) Einfach brilliant!

The company started its first share buyback program at the end of August 2007. By March 28, 2008, 99.8 million shares had been bought back for EUR6.2 billion.

Share Buyback based on the Authorization of the 2007 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	99,768,314	62.11	6,196,752,952.16
March, 2008	27,622,866	53.62	1,481,249,244.31
February 2008	22,185,448	55.69	1,235,524,406.33
December 2007	4,384,000	69.10	302,953,032.70
November 2007	16,366,000	69.05	1,130,005,849.60
October 2007	13,445,000	74.29	998,821,360.14
September 2007	14,390,000	66.72	960,165,710.94
August 2007	1,375,000	64.02	88,033,348.15

In exercise of the authorization granted by the Annual Meeting of April 9, 2008, the decision of the Board of Management allows for the buyback of 10% or approximately 96.4 million of the outstanding shares for a maximum amount of EUR6 billion

Share Buyback based on the Authorization of the 2008 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	37,283,831	38.86	1,448,922,311.86
Oct 2008	2,283,831	27.88	63,669,232.59
Sep 2008	7,690,000	39.43	303,203,682.07
Aug 2008	6,910,000	40.19	277,696,796.64
Jul 2008	13,850,000	38.14	528,276,120.47
Jun 2008	6,550,000	42.15	276,076,480.09

Revisiting China´s Sovereign Wealth Fund

Does anybody remember the buzz that Sovereign Wealth Funds would or could be the saviors of the financial market and especially the stock market around the world..... It seems that large part of the war chests (especially in China & Russia , and after this story No Kidding.... Dubai May Need Help To Repay Debt.... no one should expect miracles from the Middle Eastern petrodollars ....) are badly needed to bail out the domestic banking system & economy....... Just in time UPDATE: You can’t even depend on the SWFs via FT Alphaville

Kann sich noch einer an die Hyterie bezüglich der Sovereign Wealth Funds erinnern die drauf und dran waren die Lösung für die Kapitalmärkte und ganz besonders für die Aktienmärkte zu werden..... Es sieht ganz so aus als wenn die die zugegeben beachtliche Kriegskasse mehr und mehr dazu benötigen ( gilt besonders für China & Russland, und nach dieser Story No Kidding.... Dubai May Need Help To Repay Debt.... sollte man auch keinerlei Wunderdinge von den Petrodollars aus dem Mittleren Osten erwarten.... ) den heimischen Finanzsektor sowie einheimische Unternehmen "rauszuhauen"....... Passendes Update : You can’t even depend on the SWFs via FT Alphaville

WSJ

China's sovereign-wealth fund signed a deal to pump $19 billion into Agricultural Bank of China, part of a restructuring process that is expected to transform the bank into a stockholding company by the end of the year.

At least it could be that this "bailout/investment" from China Investment Corporation (CIC) is a better deal than their Blackstone & Morgan Stanley adventures.....

Immerhin hat das o.g. "Investment" ( oder besser gesagt Bailout ) der China Investment Corporation (CIC) gute Chancen ein besserer Deal als die Blackstone & Morgan Stanley Abenteuer zu werden.....

No Kidding.... Dubai May Need Help To Repay Debt....

I have wondered about Dubai early on in 2007 ( see Dubai / Borrow To Build.....? ) what fundamentals are behind the boom in Dubai. It really looks like lots of the megalomaniac projects that have been anounced and are already under construction will face some serious "headwinds"........ In fairness it has to be mentioned that in 2007 only 7 percent of GDP was oilrelated and lots of the giant projects and investments are an attempt to transfrom the economy... It seems that the pace in recent years was too fast and it feels like an attempt to ramp things up with a crowbar...... SEE UPDATE AT THE END OF THE POST

Ich habe mich bereits in meinen bescheidenen Anfängen als Blogger im Anfang 2007 in Dubai / Borrow To Build.....? gewundert was genau in Dubai abgeht. Es sieht in der Tat so aus als wenn ein guter Teil der größnwahnsinnigen Projekte die angekündigt und die sich fast immer auch schon im Bau befinden in nächster Zeit in erhebliche Probleme laufen könnten...... Müßte lügen wenn ich nicht ein gewisses Maß an Schadenfreude verspüren würde...... Fairerwaise muß man erwähnen das Dubai nur noch 7% des BSP dem Öl zu verdanken hat und die gigantischen Projekte ein Versuch sind die Wirtschaft radikal zu transformieren..... Leider sieht es so aus als wenn hier das Tempo in den letzten Jahren doch erheblich zu hoch gewesen ist und das ganze evtl., doch einem Versuch mit der Brechstange gleicht....... BITTE DAS UPDATE AM ENDE DES POSTINGS BEACHTEN

Dubai May Need Help From Abu Dhabi to Repay Debts

Oct. 13 (Bloomberg) -- Dubai may depend on support from neighboring Abu Dhabi and the federal government of the United Arab Emirates to help pay for a surge in borrowing, Moody's Investors Service Inc. said.

Government-controlled companies owe at least $47 billion in total, more than Dubai's gross domestic product, according to Moody's data based on economic statistics from 2006.

``We believe that leverage raised primarily through state- owned corporations will continue to grow faster than GDP for at least the next five years, during which time the Emirate's susceptibility toward execution, financing and geopolitical risks will be at its most pronounced,'' Philip Lotter, Dubai- based senior vice president at Moody's, said in a report today.

Dubai has borrowed to fund real estate projects including Burj Dubai, the world's tallest tower, and to buy stakes in Deutsche Bank AG, European Aeronautic Defence and Space Co. and Standard Chartered Plc, as it seeks to reduce dependence on its dwindling oil reserves.

Abu Dhabi, by contrast, owns more than 90 percent of the U.A.E.'s oil reserves and nearly 8 percent of the world's total. The Abu Dhabi Investment Authority, its sovereign wealth fund, has assets of between $250 billion and $875 billion, according to the International Monetary Fund.

Dubai controls its economy through state-owned companies that dominate each major industry. Dubai Holding LLC, which groups assets belonging to Dubai Ruler Sheikh Mohammed bin Rashid al-Maktoum, owns hotel chain Jumeirah Group and Dubai International Capital, which unsuccessfully bid for Liverpool Football Club earlier this year.

Default Swaps
The cost of insuring Dubai Holding's bonds has increased nearly four-fold since May, according to traders of credit default swaps. Contracts protecting Dubai Holding Commercial Operations medium-term notes for four years traded at 679.3 basis points on Oct. 10, up from 172.99 at the beginning of May, CMA Datavision prices show.

Dubai World, a state-owned holding company, acquired almost 10 percent of Kirk Kerkorian's MGM Mirage last year for about $5.1 billion. MGM shares have since tumbled to $16.80 from $84 when the deal was agreed.

> The folling quote is from my post Deutsche Bank Is Doubling Down In Vegas.....

> Der nachfolgende Kommentar stammt aus meinem Post Deutsche Bank Is Doubling Down In Vegas.....

Deutsche will have to raise its bet with another $1 billion investment in the development, at the same time local operator Boyd Gaming has shelved a $5 billion project on the Strip. That looks like a risky double-down for a bank already exposed to MGM Mirage's cash-strapped $11 billion CityCenter project nearby.

> I´m not sure if they are already on the hook but when even Dubai World is late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas it is not a very good sign.....MGM,Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Watch the folling clip and it is no wonder why they are falling behind..... (clip was deleted.... I wonder why....)

> Ich bin mir nicht sicher ob die Deutsche Bank hier schon im "Feuer" steht. Wenn aber selbst Dubai als Hauptinvestor momentan Probleme hat Kredite zu bekommen ist dies sicher kein gutes Zeichen..... MGM,Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Schaut Euch den Clip an und es ist wenig verwunderlich warum es Finanzierungsprobleme gibt....... Der Clip ist inzwischen gelöscht worden.... Leicht auszumalen warum.....

Deutsche Bank shares have fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007.

``In most countries there are identifiable delineations between the public and private sectors,'' Tristan Cooper, Moody's Middle East sovereign analyst, said in the statement. ``In Dubai, however, the state corporatist model plus the fact that the ruler and his closest relatives form the core of the government, make it difficult to draw such distinctions.''

`Implicit' Support
Abu Dhabi and Dubai are the two-largest emirates in the seven-member U.A.E.

While Dubai's economic model ``has proved successful to date, cumulative liabilities are currently rising faster than investments are able to generate returns, which increases Dubai's medium term susceptibility to execution risks and necessitates a clear understanding of wider implicit federal support when rating key government-backed corporations,'' Lotter said

UPDATE

Dubai World Has No Problem Borrowing, Chairman Says Bloomberg

``We don't have any problem raising money,'' Dubai World Chairman Sultan Bin Sulayem said in a telephone interview in Dubai today.

``Why would we announce a big tower if we can't afford to pay for it?''

> I´ve heard other people saying similar things way too often during the paste few years....

> Den Satz habe ich in den letzten Jahren schon einige Male gehört.......

Dubai's state companies have lost at least $6 billion on their five biggest public investments in the past two years, led by Dubai World's stake in casino operator MGM Mirage. Losses on undisclosed investments may be $30 billion, said Luis Costa, emerging-markets debt strategist at Commerzbank AG in London.

``About 80 percent of Dubai World is non-transparent, so it's a very tough game,'' said Costa. ``Deals such as the world's tallest tower may now need more capital injection from the state or may even fail.''

Ruler Sheikh Mohammed bin Rashid al-Maktoum has borrowed to replace Dubai's dwindling revenue from oil with earnings from tourism, finance and real estate. State-owned carrier Emirates has increased its fleet to the largest in the Middle East and has the most orders worldwide for the Airbus A380 superjumbo, as the government seeks to double tourists per year to 15 million by 2015.

Casino
Dubai World owns DP World Ltd., the third-largest international port operator, Istithmar World, a private equity firm that acquired Barney's New York Inc. last year, and Nakheel PJSC, builder of the manmade palm-shaped islands in the Persian Gulf. The developer is also building the Nakheel Tower, which will surpass the Burj Dubai, currently the world's tallest at 707 meters.

> I´ll bet that this Skyscraper ( see Nakheel Tower / Wikipedia ) won´t be build.... In hindsight Dubai should be grateful that the location had to be changed and the construction hasn´t started yet......

> Ich lehne mich mal aus dem Fenster und behaupte das dieser Turm zu Babel ( siehe Nakheel Tower / Wikipedia ) niemals gebaut werden wird... Im Nachinnein kann Dubai froh sein das sich durch einen veränderten Bauplatz die Konstruktion verzögert hat und der Bau noch nicht begonnen hat.....

Costs are rising on contracts to protect against a default by Dubai Holding LLC, which groups assets belonging to Sheikh Mohammed, including the Jumeirah Group hotel chain. Credit- default swaps rose almost four-fold in the past six months to 684 basis points, the highest in at least four years.

Dubai Holding Commercial Operations Co.'s 10-year bonds due 2017 fell 0.8 percent today, lifting the yield to a record 13.2 percent, Bloomberg data show.

``We are a very solid company and well diversified,'' bin Sulayem said. The notion of Dubai corporations having to rely on Abu Dhabi for funding ``is news to me,'' he said.

2nd. UPDATE

Dubai debt puts emirate at risk in slowdown FT

In a report obtained by the Financial Times, the ratings agency says Dubai would lack the financial muscle to cover its debt in the event of a systemic shock, such as a real estate collapse, making it reliant on Abu Dhabi to bail it out.

Publicly recorded debt levels have reached 103 per cent of 2006 GDP, the latest available figure, without including the leverage assumed by aggressive investment companies such as Istithmar and Dubai International Capital.

Multiple Fire Sales At UBS After $ 10 Billion Write Down

Looks like the UBS comment from just a few weeks ago in UBS Write Down Estimates "Best Case $ 6 Billion, Worst Case.... that the write down´won´t be big was quite an understatement..... Will be fun to watch how long the term "maximum clarity" will be up to date this time ;-) . I´m pretty sure that the same survey about bonuses for the UBS will bring less "euphoric" results..... It´s about time to learn the new version of the Investment banking lexicon: The post-credit squeeze edition. HILARIOUS!

Sieht ganz so aus als wenn der Kommentar der UBS in UBS Write Down Estimates "Best Case $ 6 Billion, Worst Case.... das die Abschreibungen nicht "wesentlich" sein werden ein wenig untertrieben gewesen ist. Welch Überraschung..... Wird spannend zu sehen sein wie lange die Haltwertzeit der "maximum clarity" in diesem Falle vorhalten wird ;-) . Ich bin mir ziemlich sicher das die gleiche Umfrage zu Bonuszahlungen" für die UBS weniger "euphorische" Vorhersagen hergeben würde..... Höchste Zeit die für die neueste Version des Investment Banking Lexicon: The post-credit squeeze edition. Köstlich!

UBS to Sell Stakes After $10 Billion in Subprime Writedowns
UBS AG, Europe's largest bank by assets, said it will write down U.S. subprime investments by $10 billion and raise 13 billion francs ($11.5 billion) by selling stakes to investors in Singapore and the Middle East.

UBS expects a loss in the fourth quarter, and may have a loss for 2007, the Zurich-based company said in an e-mailed statement today.

Securities firms and banks had announced about $66 billion of losses and markdowns linked to the collapse of the U.S. subprime mortgage market this year. UBS reported its first loss in almost five years in the third quarter after the subprime contagion led to about $4.66 billion in markdowns on fixed-income securities and leveraged loans.

Besten Dank an Zeitenwende

UBS Press Release & Deutsche Version
UBS strengthens capital base and adjusts valuations
UBS has introduced measures to substantially strengthen its capital position, adding CHF 19.4 billion of BIS Tier 1 capital. These include an issue of CHF 13 billion of new capital. This has been placed with two strategic investors: Government of Singapore Investment Corporation Pte. Ltd. (GIC) ( see GIC Website) with CHF 11 billion, and an undisclosed strategic investor in the Middle East with CHF 2 billion.


> To be honest i´m surprised that Singapore has two vehicles and that GIC has assets over $ 300 billion. I´ve heard so for only from Temasek HoldingsUnocal) in relation with Singapore. It´s very impressive that such a small country with an estimated GDP of $ 140 billion, a population under 5 million and especially without a resource base has managed to accumulate close to $ 500 billion in Assets Singapore/Wikipedia. Chapeau!

> Ich bin ehrlich erstaunt das Singapur zwei staatlich kontrollierte Fonds zur Verfügung hat und das GIC mit über 300 Mrd $ so groß ist. Ich habe bisher im Zusammenhang mit Singapur immer nur den Namen Temasek Holdings gehört. Es ist beeindruckend wie es ein kleines Land mit unter 5 Mio Einwohnern, einen BSP von knappen 140 Mrd $ und vor allem ohne Rohstoffbasis schafft fast 500 Mrd $ in Staatsfonds zu pumpen Singapur/Wikipedia . Chapeau!

At the same time, UBS has revised key input parameters of the models that are used to estimate lifetime default and resulting losses for sub-prime mortgage pools. As a result of these revisions, UBS will write down its US sub-prime holdings by approximately a further USD 10 billion.

After these actions, UBS projects a strong BIS Tier 1 ratio of above 12%. ...

In response to continued deterioration in the US sub-prime mortgage securities market, partly driven by increased homeowner delinquencies but mainly fuelled by worsening market expectations of future developments, UBS has revised the assumptions and inputs used to value US sub-prime mortgage related positions. This will result in further writedowns of around USD 10 billion, primarily on CDO and "super senior"1 holdings. In light of continued deterioration in the sub-prime market, valuations of UBS's remaining sub-prime positions reflect the extreme loss projections implied by the prices achieved in the very limited number of observable market transactions in US sub-prime related securities and indices up to the end of November.

As the basis for its wealth and asset management business, UBS wishes to maintain a very strong capital base under all circumstances. Growth in net new money continues, with inflows in Global Wealth Management & Business Banking totalling about CHF 30 billion in October and November. It will therefore strengthen its capital position by issuing new capital in transactions with strategic investors, by selling treasury shares, and by replacing its 2007 cash dividend with a stock dividend.

> Must hurt to sell shares at fire sale prices that they have bought back for a better use of their capital. In Q2 the stock price was in a range of 70-80 Swiss Francs, today close to 50 Swiss Francs. And in total they are selling 36.4 million shares......... Well done!

> Muß sehr schmerzen die teuer zurückgekauften Aktien jetzt zu Schleuderpreisen zu verscherbeln. Ironischerweise sollten die Rückkäufe seinerzeit ja die effektivere Nutzung des Kapitals ermöglichen. Im 2. Quartal lag der Preis zwischen 70 und 80 Schweizer Franken, heute nahe 50...... Und insgesamt werden knapp über 36 Mio zuvor erworbene Aktien nahe Tiefstkursen vertickert...... Gut gemacht!

Strategic investors subscribe to issue of CHF 13 billion of new capital
UBS has reached agreements with two strategic investors – GIC and one other – to subscribe to an issue of CHF 13 billion of mandatory convertible notes. This is subject to the approval of UBS shareholders at an extraordinary general meeting (EGM) which will take place in mid-February 2008. GIC has committed to subscribe to CHF 11 billion and the other investor to CHF 2 billion. The notes will pay a coupon of 9% until conversion into ordinary shares, which must take place on or before a date approximately two years after issuance. The proceeds of the issue will count as Tier 1 capital for BIS capital adequacy purposes after EGM approval.

Sale of treasury shares
The Board of Directors of UBS has further approved the re-sale of 36.4 million treasury shares previously intended to be cancelled. UBS has received indications of interest in a share issue, is considering these and will place these shares over time. This will increase BIS Tier 1 capital by approximately CHF 2 billion.

Proposed replacement of 2007 cash dividend by stock dividend
The Board of Directors proposes to replace the 2007 cash dividend with a stock dividend, i.e. a bonus issue of new shares. This will boost Tier 1 capital by CHF 4.4 billion, of which approximately CHF 3.3 billion is a reversal of accrued dividend for the first nine months of the year and the balance is dividend that will now not accrue. This is subject to EGM approval.

In total, these three actions, when completed and approved, will strengthen UBS's regulatory Tier 1 capital by approximately CHF 19.4 billion. After completion, and taking into account the expected fourth quarter loss, the firm's BIS Tier 1 capital ratio will improve to above 12% from 10.6% at 30 September 2007.

Marcel Rohner, Group Chief Executive Officer, UBS, said: "Conditions in the US mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities. In the last several months, continued speculation about the ultimate value of our sub-prime holdings – which remains unknowable – has been distracting. In our judgement these writedowns will create maximum clarity on this issue and will have the effect of substantially eliminating speculation. Together with the strengthening of our capital base this will allow us to concentrate on sustaining and developing our client businesses.

Information on GIC
GIC is a global investment management company established in 1981 to manage Singapore's foreign reserves. With a network of eight offices in key financial capitals around the world, GIC manages a broad diversified portfolio across countries and asset classes that includes equities, fixed income, foreign exchange, commodities, money markets, alternative investments, private equity, real estate and infrastructure investments.

More insights via FT Alphaville UBS boggles - $10bn of writedowns, $17bn in emergency capital

Fire Sale At Citigroup...Citigroup to Get $7.5 Billion Infusion From Abu Dhabi

When you have to increase your capital with your share price at multi year lows you know that they don´t do it for charity reasons...... Nice dilution but probably the only way to stay solvent..... Now it should be clear why they are still pushing for the "Superfund" . They are simply not able to follow HSBC. I assume this time there will be no congressional hearing related to sovereign wealth funds.......Nice to see that some "experts" still focusses on the dividend.... ;-). I assume this time even FOX Business News will get it right...... :-)

Kein gutes Zeichen wenn man sichn neues Geld zu Zeiten besorgen muß wenn die Aktien auf Mehrjahrestiefs notiert. Auf gut deutsch "Denen steht das Wasser bis zum Hals". Schöne Verwässerung für die Altaktionäre aber wohl die einzige Möglichkeit solvent zu bleiben. Nun sollte auch dem letzten klar werden warum Citigroup auf Biegen und Brechen den "Superfund" pusht und nicht wie HSBC diese Gesellschaften wieder in die Bilanz aufnimmt. Ich denke das es diesesmal kein Störfeuer von der US Politik geben wird....Besonders lustig zu sehen das einige der Experten sich immer noch mit der Dividende befassen..... Ich denke diesesmal wird sogar FOX Business News richtig berichten.... :-)

Nov. 26 (Bloomberg) -- Citigroup Inc., the U.S. bank searching for a new chief executive as it faces at least $8 billion of writedowns, agreed to sell as much as 4.9 percent of the company to the government of Abu Dhabi for $7.5 billion.


Citigroup will sell equity units to the Abu Dhabi Investment Authority that convert into common shares, the New York-based lender said today in a press release.

``This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business,'' Win Bischoff, Citigroup's acting CEO, said in the statement. It helps ``strengthen our capital base,'' he said.

> It´s about time..... Wird aber auch dringend Zeit.......

Charles O. Prince III ( deaf & ingorant CEO Prince ) was forced to step down as Citigroup's chief executive officer Nov. 4 after the biggest U.S. bank said losses on subprime mortgages and related securities may cut fourth-quarter net income by $5 billion to $7 billion. The lender said at the time that it planned to shore up capital. The company's shares, which have fallen about 44 percent this year, sank to $30.70 in New York Stock Exchange composite trading today, the lowest price in five years.

Time for a review of the buybacks in 2006 Financial Highlights 2006 pdf

....our return of cash to shareholders through our $7 billion stock buyback in 2006 ( Stock was between $ 45 and $ 55....)

> Well done! Eine Meisterleistung!

ADIA, the sovereign wealth fund of the government of Abu Dhabi, is buying equity units that convert into Citigroup shares at prices ranging from $31.83 to $37.24 per share, on dates ranging from March 15, 2010, to Sept. 15, 2011, the U.S. bank said. The units will pay 11 percent annual interest.

> Here is a more detailed look via the FT Junk Citi

Citi is paying a higher interest rate than companies that borrow on the high-yield, or junk-bond, market; currently they pay roughly 9% for straight bonds. Typically, convertible bonds pay lower interest rates than straight bonds, although a particular bond’s structure could affect the interest rate paid......

Even after the spurious tax argument, it is difficult to see how this funding can be costing much less than 9 per cent.

Abu Dhabi, one of the United Arab Emirates, will have ``no role in the management or governance of Citi, including no right to designate a member'' of the company's board, according to the statement.

FT Alphaville has some more thought on The stealthy rise of the sovereign wealth fund

Von FT Alphaville gibt es ein paar mehr Gedanken zum The stealthy rise of the sovereign wealth fund

More insights from Mish , Naked Capitalism and the "Peter Schiff" of bank analysts Meredith Whitney

Libya launches $40bn SWF

Another sign how much the world has changed. Who could have thought of quotes like this just a few years ago...

Einmal mehr ein Beispiel wie sehr sich die Welt in den letzten Jahren gewandelt hat. Oder wer hätte ernsthaft an ein solches Zitat vor ein paar Jahren glauben mögen.....

“If you wanted to invest in the past, no one would take your calls. Now bankers fly on their private jets to see us,” said Mr Layas, a former chairman of the Libyan Arab Foreign Bank. ..

Maybe there is still hope for others parts of the world.....

Evtl. besteht ja doch noch Hoffnung für Teile der Welt .....

Libya starts to deploy $40bn fund / FT

A newly established Libyan sovereign wealth fund is starting to deploy its $40bn (£19bn, €28bn) capital on international markets as the oil-rich state showcases its rehabilitation in the global community.

Following in the footsteps of the Gulf countries, the regime of Colonel Muammar Gaddafi earlier this year allocated tens of billions of dollars that had been managed by the central bank to a new entity, the Libyan Investment Authority (LIA), which will now also receive a portion of the surplus oil revenues each year.

Although the ramshackle Libyan economy is in need of massive investment after decades of isolation, the government’s stated strategy is to reduce the country’s oil dependence and diversify sources of income.


“Because of sanctions our policy used to be to protect our assets and keep our funds in short-term deposits,” said Mohamed Layas, the LIA’s executive director, in an interview with the Financial Times. “After the embargo was lifted, it was a new era, a new opening, and we had a tremendous increase in oil revenues over the last five years.”

Mr Layas said the fund, which will have offices in London and Tripoli, would concentrate at first on portfolio investments managed through western banks and institutions. But it also intends to buy real estate worldwide and, when it is more established, look at private equity transactions.

“If we buy shares in a construction company abroad, for example, the other benefit is that we will generate business for them in Libya, where we have a huge development plan,” he said.

Although not its primary target, the LIA is also considering investing in hydrocarbon development projects. It was a small partner in the $900m exploration contract BP signed with Tripoli in May. Still largely under-explored, Libya is hoping to increase its oil production from 1.7m to 3m barrels per day by 2015. Its oil revenues are expected to reach $15bn this year.

The LIA has set up a $2bn investment fund with its counterpart in Qatar to invest in Libya, Qatar and western markets. It has taken on three existing entities: the $5bn Libyan African investment portfolio; Lafico, a $3bn assets investment company mainly involved in real estate; and an $8bn existing portfolio of other international investments, largely in capital markets.

The creation of the LIA highlights the transformation of Tripoli from pariah state to international partner since its decision in 1999 to hand over suspects in the 1988 Lockerbie bombing in Scotland, and later to renounce its weapons of mass destruction.

On Tuesday, Tripoli secured a non-permanent seat on the United Nations Security Council – the body that lifted sanctions against it in 2003.

Gulf States Counter M&A Slowdown With $25 Billion of Takeovers

This should be really no surprise. What else ( except gold ) should they buy with the depreciating $......This trend is going to be a support for the equity market for years to come and with the recent central bank action the appetite for bonds should be "subpar"......

Das sollte wirklich keinen überraschen. Was sollen die auch anderes (ausser Gold) mit Ihren täglich verfallenden $ kaufen...... Dieser Trend wird sicher noch auf Jahre hinaus eine wichtige Unterstützung für die weltweiten Aktienmärkte spielen. Und nach den letzten Aktionen der Notenbanken rund um den Globus dürfte das Vertrauen in Bonds generell gelitten haben......

Key will be to identify the markets which will benefit the most. And i doubt that US$ assets will be a winning bet.....

Entscheidend wird wohl sein die Märkte zu identifizieren die am meisten von diesen gewaltigen Geldströmen profitieren werden. Und ich nicht davon aus das der Dollarraum zu den Gewinnern zählen wird.

via Brad Setzer

Norway has long held only about 35% of its oil revenue in dollars, Russia now has less than 50% of its reserves in dollars and a few Gulf states have also rather clearly trying to reduce the dollar’s share of their (growing) portfolios. In 2000, for example, as much as 85% of the Kuwaiti investment authority’s assets may have been in dollars. That total is now probably under 50% (KIA’s equity portfolio is certainly under 50%). ADIA reportedly shifted toward emerging economies a few years ago. And a host of Gulf funds now want to invest in emerging Asia …

In his now classic paper on the oil-exporting economies, Ramin Toloui of PIMCO calculates that if oil exporting economies invest 60% or more of their rising revenues in dollar assets, an increase in the price of oil is dollar positive (see figure 14). And if they invest less than 60% in dollar assets, a rise in the price of oil is dollar negative.

FT

The news that pushed the dollar lower on Thursday came from Saudi Arabia, where the central bank, which has pegged its currency to the dollar, decided not to follow the Fed by cutting by 50 basis points. That prompted speculation that the Saudis no longer want to peg to a currency in freefall.

Further, a long-term link between the dollar and the oil price has broken down. A high oil price used to mean a strong dollar as oil exporters put their money in dollars. But now we have record crude prices and the weakest dollar in decades.

The biggest risk is probably that there is some kind of protectionism going on to block state owned (also from China etc) in general. The discussion is already heating up in Europe (except in the UK).

Das größte Risiko ist wohl darin zu sehen das immer mehr Regierungen generell überlegen wie solche Deals die von staatlich geführten Fonds unternommen werden verhindert werden können. Der Trend zur Abschottung ist sowohl in Europa ( Ausnahme UK) als auch in den USA nicht zu übersehen.

Gulf Counters M&A Slowdown With $25 Billion of Deals

Sept. 21 (Bloomberg) -- The Persian Gulf states, flush with cash from burgeoning oil revenues, are buying overseas assets at a record rate and countering the paucity of acquisitions hampered by the summer's surge in corporate borrowing costs.

Abu Dhabi agreed yesterday to pay $1.35 billion for 7.5 percent of Carlyle Group, the world's second-biggest private equity firm. Dubai and Qatar took competing stakes in Nasdaq Stock Market Inc., London Stock Exchange Group Plc and Nordic bourse OMX AB. Qatar also won approval to examine the financial records of J Sainsbury Plc, the second-largest U.K. supermarket chain.

All told, the deals are worth $25 billion, according to data compiled by Bloomberg. The pace of international investments by Gulf states, which earn $1.2 billion a day from oil exports, is quickening as they seek to diversify beyond energy. The nations have already spent a record $68 billion on overseas acquisitions this year, the Bloomberg data show.

``They are not just putting their money in bank deposits and government bonds any more,'' said Eckart Woertz, chief economist for the Gulf Research Center in Dubai. ``They are after strategic assets.''

The record pace of global mergers fell in August to the slowest in two years as rising costs for credit eroded investor confidence. The three-month dollar London interbank offered rate, a lending benchmark, rose to 5.73 percent on Sept. 7 from 5.36 percent at the end of July. The rate fell to 5.21 percent yesterday after the Federal Reserve reduced interest rates for the first time in four years earlier this week.

Slowest Month
About $188 billion of deals was announced last month, the lowest amount since July 2005, according to data compiled by Bloomberg. The value of deals dropped after losses in subprime mortgage bonds contaminated debt markets, prompting a sudden increase in corporate borrowing costs and a slide in stocks.

Not in the Persian Gulf. The pace of takeovers may accelerate as oil trades at a record high and Dubai and Qatar race to lure international banks, asset managers and brokerages. Oil reached a record $83.90 a barrel in New York yesterday.

Based on the share prices of LSE, Nasdaq, OMX and Sainsbury on Sept. 19, Dubai's investment would be $2.5 billion and Qatar's would be $21.5 billion. ....

``Qatar is a clone of Dubai,'' said Haissam Arabi, a Dubai- based managing director of asset management for Shuaa Capital PSC. ``They have taken their lead from Dubai on most fronts. Dubai had Emirates airline, then Qatar set up Qatar Airways. Dubai established itself as a tourist destination, and then Qatar tried to position itself as such. And now as financial centers, Dubai moved and Qatar followed.''

Dubai and Qatar are overshadowing Bahrain's traditional position as the Persian Gulf's financial hub. Dubai is the second-biggest sheikhdom in the United Arab Emirates after Abu Dhabi. The six Gulf Cooperation Council states are the U.A.E., Bahrain, Kuwait, Qatar, Oman and Saudi Arabia.

Mubadala Development Co., an investment company owned by the government of Abu Dhabi, will buy a 7.5 percent non-voting stake in Carlyle.

Sainsbury, based in London, yesterday softened its opposition to a takeover bid by Qatar after the emirate said it would borrow less to fund the deal.

Cooperative Takeovers
The Gulf states sometimes cooperate on acquisitions. Sheikh Hamad bin Jassim bin Jaber al-Thani, the Qatar Investment Authority's CEO and since April Qatar's Prime Minister, said in February the country may buy as much as 10 percent of Airbus SAS parent European Aeronautic, Defence & Space Co. because the shares are undervalued.

When Dubai International Capital LLC bought 3.12 percent of EADS in July, some of its money came from Qatar, according to Chief Executive Officer Sameer al-Ansari.

Blocked Ports
Dubai generated 3 percent of its gross domestic product from oil last year and has a population of about 1.5 million. As oil wells run dry, the emirate is building the world's tallest tower, offshore islands in the shape of palm trees, and a leisure park three times the size of Manhattan.

It's also earmarked more than $82 billion for investment in aviation, including construction of the world's biggest airport.

The Gulf's overseas acquisitions haven't always succeeded. Qatar in December lost out to a group led by Macquarie Bank Ltd. in its bid to buy Thames Water Utilities.

Dubai-owned container port operator DP World last year agreed to buy London-based Peninsular & Oriental Steam Navigation Co. for $6.8 billion, only to be forced to sell P&O's U.S. port assets under pressure from lawmakers who threatened to block the takeover on the grounds of security.

New York Democrat Senator Charles Schumer said yesterday a deal that makes Borse Dubai the biggest shareholder in Nasdaq requires scrutiny.

``There are serious issues that need to be investigated,'' he said at a press conference in Washington. ``Questions must be asked and answered before the deal goes forward.''