Even Saudis Feel The Blues......

You better don´t tell them that things are "contained"....... This is indeed fascinating. MOODY’S has given them an "A1" rating and Saudi-Arabia owns 70% of Sabic and still they cannot place the bonds......And they have to prive them over 10 percent....... This kind of deals are probably the ones that PIMCO is warming up to.

Man sollte besser das Wort "contained" nicht in der Nähe der Verantwortlichen von SABIC in den Wort nehmen....Dieser Vorgang ist in der Tat bemerkenswert. MOODY’S hat denen noch vor kurzem ein A1" Rating gegeben und der Staat Saudi Arabien ist mit 70% Haupteigentümer und trotzdem ist es nicht gelungen die Anleihen zu platzieren...Zudem rentieren die bei über 10%....Das müssen die Art von Deals sein die PIMCO interessant findet


Sabic , which is 70% owned by the Saudi government, said to cut bond part of GE Plastics financing

SAN FRANCISCO (MarketWatch) -- Middle Eastern petrochemical giant Sabic has slashed the bond portion of a large borrowing package to finance its $11.6 billion acquisition of General Electric's plastics division, instead leaning harder on banks to fund the deal, media reports said Thursday.



It's another sign that the fall-out in subprime loans is rippling throughout global financial circles, as far-removed from the U.S. mortgage market as Riyadh.

Sabic, whose full name is Saudi Basic Industries Corp., lowered the senior unsecured bond portion of its financing to $1.5 billion from about $2.76 billion and raised the bank loan portion to about $6.6 billion from $5.4 billion to make up the difference, said separate reports from Dow Jones Newswires and Bloomberg. They cited unnamed sources and a report from Standard & Poor's. Sabic also dropped a previously planned euro-denominated tranche of the bond issue, said the articles.

The altered structure stems from the difficulty Sabic would have faced accessing the corporate bond market, one source told Dow Jones. The bonds, expected to price Monday, are likely to carry a yield of 10.25%, said the articles.

Sabic's change of heart is the latest example of a corporation tweaking its borrowing plans because of the recent pall cast over the bond markets by souring U.S. home loans.

Inflation in Saudi Arabia / Brad Setzer

after questioning the us quality of measuring cpi i think was to harsh... (click labels)

here comes saudi arabia!

thanks to brad setser and his excellent blog. http://www.rgemonitor.com/blog/setser/

nachdem ich ja in der vergangenheit die eigenarten der us erhebung des cpi kritisiert habe relativiert sich die kritik wenn man sieht wie kreativ saudi arabien vorgeht.

empfehle zudem den link und den blog von brad setser.


The details reported in the Sfakianakis paper left me more convinced that the Saudi data – which shows a 3.5% y/y increase in prices – understates actual inflation. Some tidbits:

• The price of a schawarma sandwich is up 30% in the last 18 months.


• Fresh fruit prices are up between 50 and 80% (y/y), and vegetable prices are up 20-40%, according to an informal survey. It seems that higher paying construction jobs are pulling imported labor out of agriculture (cement factories are at 100% of capacity).


• Beef prices are up 15%, Fish prices are up 20-35% (all y/y).


• Rents in Riyadh are up 20-25% y/y


• Wages for high-end construction jobs are up 50% -- and Saudi contractors are complaining of a shortage of imported labor at the low-end.

All in all, that doesn’t sound to me like an economy with 3.5% inflation, even if the price of a telephone call is falling. A cut in fuel prices (yes, a cut -- nothing like sitting on a big pool of oil) in 2006 did help hold down 2006 inflation, but no further cuts are expected in 2007 ...