November, 2009
AIG’s shares tumble on loss reserve fears
Shares in American International Group were hit by heavy selling on Monday, ostensibly on the back of a downbeat note issued by BernsteinResearch.
By ‘downbeat’, we mean ‘quite aggressively bearish’. From the note,
Port in a storm: DP World’s London Gateway struggles for funds
The flagship UK development of DP World, the port arm of the troubled Dubai World, looks to be sinking as it struggles to raise financing for the project, based on the Thames at Thurrock in Essex.
The London Gateway project,
CDS report: Dubai has more in common with Latvia than Iceland
Gavan Nolan of Markit wrote this CDS report
European credit and equity markets suffered a torrid session today as the debacle in Dubai sparked a fresh bout of risk aversion. The Markit iTraxx Europe index ended the day at 89.5bp,
Camel finance
No, that’s not an outrageous slur. It’s a reference to this — the Souk al-Manakh.
This was former camel trading venue was home to the 1982 stock market crash in Kuwait, which wiped out many billions in regional wealth at the time. Older investors in the Gulf will see it as a history lesson for Dubai in how one localised problem can suddenly become much wider and deeper.
Just a regular cement deal on Aim?
Aim, London’s junior market, just never disappoints when it comes to weird and wonderful corporate stories.
The latest concerns Prosperity Minerals, which owns an iron ore trading operation in China and stakes in several Chinese cement businesses.
RBC: Dubai is just another case of irrational exuberance
RBC’s emerging markets team have published their view on the whole Dubai debacle.
And in their opinion it was always abundantly clear there was never going to be any recourse back to the sovereign’s assets for Nakheel bond investors.
UBS: still a ‘below average’ bank
Standard & Poor’s triggered something of brouhaha when it published a 22-page report comparing global banks’ risk-adjusted capital (RAC) adequacy.
The report found that several of the world’s biggest banks — including UBS and Citi — fell well short of what S&P considered to be the benchmark that “corresponds to full coverage of the level of stress embedded in our ratio.”
[Outlook 2010] The deluge begins
And so it begins – strategists at the big investment banks are starting to publish their 2010 forecasts.
Morgan Stanley duo Graham Secker and Teun Draaisma were quick on the draw with a pretty bearish set of predictions for the year ahead.
Confusion in the Hamp-er
The US government’s Home Affordable Modification Plan is many things but it is not a programme with a zero per cent success rate.
Contra Bloomberg:
Almost 651,000 loan revisions had been started through the Obama administration’s Home Affordable Modification Program as of last month,
CMBS by the book
Poor Borders (UK).
Beloved by book-buyers and Oxford Street procrastinators everywhere — but not, it seems, enough to keep it in business.
The bookseller announced it was going into administration last week,
Lunch Wrap
On FT Alphaville Monday morning,
- What next for Nakheel?
- Could the Dubai debacle trigger a Dirham devaluation?
- Salad bar brawl at M&B.
- The issue of shariah compliance and the Nakheel sukuk.
What next for Nakheel?
Hindsight is a wonderful — and sometimes amusing — thing.
That was part of a recent web project for Emirates property-developer Nakheel — as well as the basis of a billboard campaign across Dubai.
Could the Dubai debacle trigger a Dirham devaluation?
Highly unlikely, is the sensible answer.
The UAE dirham, which has been pegged to the US dollar at a rate of 3.6725 since 1997, has the full faith and wallet of the state of Abu Dhabi behind it.
With Abu Dhabi estimated to have billions of dollars of foreign currency reserves,
Markets live transcript 30 Nov 2009
Markets live chat transcript for the chat ending at 12:14 on 30 Nov 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) NH:hola NH:it’s 11.03am NH:and time for Markets live
Salad bar brawl at M&B
The coleslaw and kidney beans are starting to fly at the owner of the Harvester restaurant chain.
On Monday morning, Mitchells & Butlers, which owns All Bar One and Toby Carvery, decided to go public and bring to the attention of shareholders the recent manoeuvrings of Piedmont Inc.,
The issue of shariah compliance and the Nakheel sukuk
When is a sukuk not a sukuk?
When it fails to be shariah compliant, of course.
And the key issues, it seems, that may or may not make a sukuk shariah-compliant relate to principal protection and the bondholder’s unsecured status.
Nakheel requests suspension (with Jebel update)
First the debt standstill, and now the developer of that infamous palm tree island thing wants trading in its three listed Islamic bonds halted.
From Nasdaq Dubai on Monday morning:
Following the announcement on Wednesday 25 November from the Government of Dubai,
How to end-of-year window dress, by JPM
Short and err, simple, this one.
From JP Morgan’s European quant strategy team:
As we head into year end, managers may look to reposition their portfolios following a phenomenally strong equity market rally.
UAE post-holiday hit
As expected, the Abu Dhabi and Dubai stock exchanges have been hit with a wave of selling on their first day open since the Dubai debacle broke.
But with brokers having predicted the indices to be suspended limit down,
Haircuts in Dubai
So the United Arab Emirates has sort-of-but-not-quite stepped in to save Dubai — pledging liquidity support for UAE banks.
At the same time, however, speculation over just what sort of debt restructuring lies in wait for Nakheel bond investors continues apace.
Further reading
Elsewhere on Monday,
- A pick n’ mix bailout for Dubai is the most sensible option.
- Iran vs the US in the Dubai crisis.
- An empire at risk.
- Factbox: What assets Dubai could be forced to sell.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: Greece can expect no gifts from Europe
After Dubai, will Greece be next? This question is technically a category error, since Dubai World is not a state but a state-owned company,
Snap news
Breaking pre-market news on Monday,
- UAE stock market opens 5.9 per cent down – FT.
- Mitchells & Butlers notes press speculation regarding “increasingly difficult relationship” between Board and some shareholders – statement.
UAE push to head off debts damage
The United Arab Emirates on Sunday stepped in to shore up its banks and head off any potential capital flight as the nation’s authorities attempted to counter concerns over Dubai’s debt problems, the FT said.
The intrinsic unimportance of Dubai World
Dubai is not systemically significant, according to the FT’s “Maverecon” blogger Willem Buiter. Still, the crisis in the emirate may yet do some systemic good by alerting fiscal policy makers to the vulnerability of their nations’ fiscal-financial positions,
Thirty financial groups on systemic risk list
Thirty global financial institutions make up a list that regulators are earmarking for cross-border supervision exercises, the Financial Times has learnt. The list, drawn up by regulators under the auspices of the Financial Stability Board,
Bid nears for AIG aviation business
A consortium of private-equity investors and the head of International Lease Finance Corp are close to making a bid for about half of the aviation-leasing business of American International Group, ILFC’s troubled parent.
GSK to cut drug prices for developing countries
GlaxoSmithKline is to cut significantly the prices of its medicine in emerging economies next spring, the FT reported. The reductions – expected to reduce prices in most developing countries to below two-thirds of western prices – reflect intensifying efforts by drug companies to tap demand from the faster-growing economies as western markets stagnate.