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

That´s What Is Happening When You Outbid A SWF......Hapag-Lloyd Said To Seek As Much As $2.4 Billion In Capital

No problem with overbidding NOL ( Temasek ) but when your consortium is in part backed by the taxpayer ( City Hamburg & HSH Nordbank ) it is getting "annoying"....Especially when the taxpayer had already to bail out HSH Nordbank with well over € 10 billion ( and counting / see States agree €13bn HSH bail-out ).... Will be interesting to see how long the public will tolerate this form of "patriotism" or should i better say "protectionism"....

Maybe some of the officials were blinded with the success in former interventions (Beiersdorf/Procter&Gamble and Norddeutsche Affinerie/A-Tec).... France must be jealous.......... :-)

Grundsätzlich sind Übernahmen die massivst überbezahlt sind nicht weiter verwerflich...... Anders sieht es da aus wenn das Konsortium das den "Mondpreis" bezahlt hat zu nicht unwesentlichen Teilen der öffentlichen Hand ( Stadt Hamburg & HSH Nordbank ) zuzuordnen ist...... Ganz abgesehen davon das die HSH Nordbank bereits mit etlichen Mrd € ( siehe States agree €13bn HSH bail-out ) von den Steuerzahlern gestützt werden mußte....... Hier eine mehr als gelungene extra3 - Chronologie HSH Nordbank GENIAL :-)

Denke das diese Art des Patriotismus und der Standortpolitik ( evtl. sind die Erinnerungen an früher erfolgreich geschlagene "Schlachten" wie Beiersdorf/Procter&Gamble bzw. Norddeutsche Affinierie/A-Tec noch zu gut in Erinnerung) doch gewaltig aus dem Ruder gelaufen ist...... Böse Zungen könnten hier auch von Protektionismus sprechen...... Da könnte sogar Frankreich neidisch werden... :-)

Flashback October 2008

Rückblende Oktober 2008

TUI Sells Hapag-Lloyd Unit in 4.45 Billion-Euro Deal

Oct. 12 (Bloomberg) -- TUI AG, the German owner of Europe's largest travel company, agreed to sell Hapag-Lloyd to a Hamburg- based investor group in a deal that values the shipping company at 4.45 billion euros ($6 billion).

The Hamburg group, led by the city's government and logistics billionaire Klaus-Michael Kuehne, was the sole remaining bidder after Neptune Orient Lines Ltd. ( Temasek Holdings - the investment arm of the Singapore Government - is the largest single shareholder with a 68% holding ) dropped out on Oct. 10. TUI initiated the sale in March, giving in to investor pressure to focus on tourism.

The investor group, called Albert Ballin KG after a famous Hamburg ship owner, bid for the company to secure jobs and an important part of the city's maritime history. The group consists of the city of Hamburg (Hamburg alone has a holding of about 23 percent), Kuehne, private investment bank M.M. Warburg & Co., regional bank HSH Nordbank AG, and insurers Signal Iduna and Hanse Merkur.

Fast forward to today........

Nun zu der heutigen Schlagzeile.......

Hapag-Lloyd Said to Seek Up to $2.4 Billion Capital

July 9 (Bloomberg) -- Hapag-Lloyd AG, Germany’s largest container shipping line, is seeking as much as 1.75 billion euros ($2.4 billion) in capital from lenders and shareholders including TUI AG, two people familiar with the matter said

German banks will be asked to provide a 1 billion-euro loan backed by the federal government, one of the people said. TUI would shoulder 325 million euros and Albert Ballin 425 million euros, the person said. The Hamburg city, part of Albert Ballin, would pay 170 million euros, according to the person.

Doubling down.......Another interesting part is that TUI is still owning over 40 percent and has given Hapag-Lloyd significant credit lines.....The FTD has an estimate of only € 400 Million. According to Manager Magazin & TUI Deal Presentation ( Page 11) it is closer to € 1.4 Billion......

Hört sich für mich ganz nach "verbilligen" an......Interessant ist zudem das TUI immer noch über 40% an der Reederei hält und Hapag-Lloyd zudem nach der FDT mit 400 Mio € an Kreditlinien versorgt hat ( siehe auch Hapag-Lloyd braucht Milliardenhilfe ).Gemäß dem Manager Magazin ( siehe Hapag-Lloyd in schwerer See ) und der TUI Deal Präsentation ( Seite 11 ) vom Februar sind es sogar 1,4 Mrd €. Hier mehr vom Handelsblatt Notruf in stürmischer See

Needless to say that TUI is already rated at JUNK...... I´ll bet that they already regret that they haven´t sold to Temasek......

Brauche wohl nicht weiter erwähnen das TUI selbstredend seit Jahren mit JUNK geratet wird....... Bin mir sicher das die es bereits bitter bereuen nicht an Temasek verkauft zu haben.....

Corporate Rating

	Corporate Rating	Ausblick
Standard & Poor´s	B+	negativ
Moody´s	B2	negativ

Here is more on on the outlook for the shipping and container business...........

Hier mehr zum trüben Ausblick für die Containerbranche.........

Trade Update: Container Shipping "A Black Hole of Losses" Naked Capitalism

Cargo ships will carry 27 million fewer containers by year's end than they did in 2008 -- a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants' Container Forecaster Report.

"There has never been a decline like this before. We have never seen numbers like these," said Neil Dekker, editor of the Drewry report. "The container industry is looking at a $20-billion black hole of losses. We can expect a lot of casualties."...

FT Alphaville

Market imbalances are in our view aggravated by the large newbuilding orderbook across most segments. These vessels will be delivered during difficult market conditions with most having been ordered at high rices. All shipping sectors will likely be affected by the high prices paid for newbuildings in recent years.

By our reckoning, these vessels will, on average, have to earn high freight rates to cover their purchase price and operating costs. With freight rates now very low in some segments, vessel operators look likely to incur substantial losses.

Consequently, we expect that the downturn for shipping will be severe and prolonged. We expect some relief on supply-side pressure, however, to come from widespread newbuilding cancellations or deferrals, and subsequent bankruptcies at weaker shipyards or cancellation of new ‘greenfield’ shipyard projects, primarily in China. We believe this is most likely to affect deliveries in 2011 and 2012

A sudden ratcheting upwards of the risk profile of these portfolios, which is what S&P expects, could mean a quadrupling in demand for regulatory capital under Basel II - quite a significant increase, particularly in these strained times.

The orderbook/current fleet ratio is indeed "stunning"......

Das Verhältnis Orderbuch im Verhältnis zur aktuellen Flotte ist in der Tat "atemberaubend"......



I´ll finish with one HSH Nordbank figure ......

Abschließend eine wenig beruhigende HSH Nordbank Zahl

Shipping lending represents 7.4x HSH Nordbank’s equity at end 2007

There is a good chance that large party of the shipping financing arm will be "outsorced" to a Bad Bank.....

Bin mir sicher das große Teile der Schiffsfinanzierungen demnächst in einer eigens dafür gegründeden Bad Bank landen werden.....

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......

"China Inc." Deal Premiums.......

Another way to recyle the greenback.... The race to hard assets is speeding up.....Unfortunately China´s deal ethics are more than often non existent & inhuman ( see Oil for China, Guns for Darfur / China and Sudan Fact Sheet ) UPDATE: Says China should buy gold, natural resources, U.S. land

Auch ein Weg wie man die ungeliebten und im Überfluß vorhandenen US $ Bestände wiederverwerten kann..... Die Flucht in Hard Assets wird weltweit sicher noch zunehmen.... Wenig überraschend ist China auf dem Weg zum Ziel im Zweifel jedes Mittel recht ( siehe Oil for China, Guns for Darfur / China and Sudan Fact Sheet ).....UPDATE: Says China should buy gold, natural resources, U.S. land



Is China Inc. Overpaying in Its Merger Deals? WSJ Deal Journal
Deal makers know that to succeed you have to make your assets speak louder than your liabilities. China Inc. is learning that lesson.

Just look at Sinopec’s bid to acquire Swiss oil company Addax, which has a big presence in Africa. The price that China Petrochemical Corp., the Chinese state-owned oil company known as Sinopec, is offering is much higher than usual for the sector, analysts say.

Sinopec’s offer is equivalent to $34 a barrel of proved reserves and $14 a barrel of proved and probable reserves. The African transaction average in 2007, when the average crude price is similar to current prices, was $14.40 a barrel for proved reserves and $9.90 for proved and probable reserves, respectively. On a proved basis, the 2007 average suggests $3.1 billion total value for the deal. Therefore, $7.2 billion implies a 135% premium.

The deal also shows China’s willingness to take risks, as Sinopec would gain a presence in oil-rich but politically sensitive Iraqi Kurdistan as well as offshore West Africa, one of the hottest sectors of the oil world but one that includes Nigeria, where local militants continually harass drillers.

Already this year, Chinese companies have notched 10 deals in the oil & gas space. The total number of oil & gas deals in all of last year was 14

This Sinopec deal, if completed, would be the largest overseas takeover in China’s M&A history in natural resources The deal also would boost the value of Chinese oil & gas mergers and acquisition to $12 billion, up 80% from the same period last year.

> Add this number to the mix ( via WSJ )

> Um das Bild abzurunden sollte man die nachfolgende Summe ebenfalls miteinbeziehen.....

Over the past half-year, China has proffered more than $45 billion in loans to Russia, Brazil, Venezuela and Kazakhstan in exchange for long-term crude supplies.

> Very unlikely that this trend will reverse course......

> Wenn man jetzt noch die Reaktion der kommenden "Elite" mit berücksichtigt halte ich es für extrem unwahrscheinlich das sich dieser Trend demnächst ändert...... :-)

Dennis Gartman

As we reported here, Geithner’s attempts to reassure Beijing authorities that the US government was still upholding a strong US dollar policy were met with loud laughter by an audience of students at Peking university.

Got GOLD....?

How Not To Restore Confidence....."United Arab Emirates & Spain Edition"

So much for the transparancy...... Looks like the prospects for the gulf region reagion are somewhat "clouded"...... This is especially true for the Dubai where the drop height is particularly high..... :-) ( see also No Kidding.... Dubai May Need Help To Repay Debt....)

Einmal mehr zeigt sich das der Ruf nach mehr Transparenz rund um den Globus zu hören ist nicht mehr als Lippenbekenntnisse sind. Schade das man nicht mehr nur explizit auf Fed & Co aus den Staaten schimpfen kann........ Die Aussichten für die noch vor einem Jahr "unverwundbare" Golfregion haben sich nicht nur wegen des fallenden Ölpreises merklich eingetrübt. Zum Glück sind immerhin Teile der Region dank Ihrer Sovereign Wealth Funds nicht von der Gnade ausländischer Kreditgeber abhängig. Dummerweise gilt das nicht für Dubai wo die Fallhöhe besonders hoch ist...... :-) ( siehe auch No Kidding.... Dubai May Need Help To Repay Debt.... )

Hat tip to Tim and his blog The Mess That Greenspan Made

‘Banks are hereby required not to be in a hurry to publish their audited annual accounts’ FT Alphaville

Yes, that’s right.

If you happen to be a bank in the United Arab Emirates you have most likely received the above request from the central bank, according to reports from the Zawya Dow Jones newswire. Could the regional lender of last resort be trying to buy some time? As the agency reports (our emphasis):

DUBAI (Zawya Dow Jones)–The United Arab Emirates’ central bank has sent letters to local lenders asking them not to rush the announcement of their fourth-quarter earnings and to be fair in evaluating their investments, a senior banker said Tuesday. “The central bank sent letters to banks on Saturday to ensure prudent application of disclosure principles.

The central bank asked banks not to rush to announce their results,” the banker, who spoke on condition of anonymity, told Zawya Dow Jones. Under U.A.E. regulations, local banks have a 45-day period from Dec. 31 to report their results. “Banks are hereby required not to be in a hurry to publish their audited annual accounts,” Central Bank Governor Sultan bin Nasser Al Suwaidi said in the letter, seen by Zawya Dow Jones. “It’s a very prudent step to ensure the central bank is able to provide guidance for consistency across all banks in the U.A.E., in particular regarding determination of fair value and on general provisioning such as portfolio level rovisions,” said Sanjay Uppal, chief financial officer at Emirates NBD.

In the letter, the central bank tells bankers that both it and the federal government are aware of the impact the global credit crisis is having on world markets and are addressing the issue of liquidity in the U.A.E., but that banks also have a role to play. “Under these circumstances, banks should exercise vigilance and utmost caution before they publish their audited annual accounts for the year 2008,” Suwaidi said, adding that world markets remain highly volatile as investors have been prone to overreact and as a result securities may be hard to assess. Suwaidi said the central bank has started to examine the “true value” of asset quality in banks. But gauging this may take more time than under normal circumstances, as the central bank needs to identify carefully the nature and value of the assets, Suwaidi said. The central bank also asked financial institutions to build adequate provisions and reserves.

From Creditflux via Alea / FT Alphaville

Spanish website Cotizalia reports that Spain’s banks and cajas are negotiating on a one-to-one basis with the Bank of Spain to “fine-tune” their 2008 accounts in order to avoid taking catastrophic write-downs on lans.According to the article, the central bank has agreed to allow the banks to increase the “calendar of amortisation” of these troubled assets, which are said to be mostly loans to property developers.

Who Will Be Left To Buy US Treasuries......

I think this will be one of the most important questions especially after one "natural" buyer after another buyer like China is obviously has to spend lots of their "war chest" at home ( see this excellent piece via naked Capitalism China Announced $586 Billion Stimulus Plan, No Kidding.... Dubai May Need Help To Repay Debt.... & You can’t even depend on the SWFs).....

Ich denke eine der entscheidenden Fragen in naher Zukunft wird sein ob es den USA weiterhin gelingt genügend ausländisches Kapital zu animieren wöchentlich wachsenden Baliouts (AIG, GM, ..... ) und die gefühlten quartalsweisen "Konjunkturpakete" zu finanzieren ( ganz zu schweigen von dem üblichen Defizit.....). Es sieht immer mehr so aus als wenn etliche der bisherigen "natürlichen" Käufer immer mehr Mittel aufwenden müssen um Ihre eigenen Wirtschaft vor einer ( nennen wir es vorsichtig ) Verlangsamung zu retten ( siehe via Naked Capitalism China Announced $586 Billion Stimulus Plan, No Kidding.... Dubai May Need Help To Repay Debt.... & You can’t even depend on the SWFs).....


In the meantime the US is anouncing one baliout a week ( AIG, GM, ..... ) and is discussing another stimulus package almost on a quarterly basis...... On top of this the Fed is close to a zero interest policy and the recent strength in the $ is likely mainly atrributet to the global delevereging..... Probably not the best circumstamces to attract trillions of foreign capital.... Especially when your futue liabilities are close to $ 50 trillion ( see If we are Rome, Wall Street's our Coliseum make sure you don´t miss the Colbert video with the former comptroller Walker )

Es bedarf schon einer gewissen US Arroganz darauf zu wetten das die Ausländer trotz einer Nullzinspolitik, einer Währung die wohl einen nicht geringen Teil Ihrer letzten Stärke allein dem Umstand des weltweiten Deleverering zu verdanken hat, neuen Haushaltslöchern beinahe im Stundentakt sowie der über allem stehenden tickenden Zeitbombe von Social Security & Pensionszusagen etc ( mit nahezu 50 Billion $ , siehe If we are Rome, Wall Street's our Coliseum , besonders empfehlensert ist das Interview mit dem früheren Oberaufseher der US Finanzen.....) weiterhin gewillt und in der Lage sein werden dieses zu finanzieren.....

I don´t want to speculate what could happen if the foreigners have to sell some of their US assets...... Got gold......?

In allen Überlegungen möchte ich leiber nicht damit anfangen zu spekulieren was passieren könnte sollten die Ausländer anfagen aktiv Ihre Positionen zu veräußern...... Got Gold.... ?

Thanks to Contrary Investor

Needless to say that US debt is still rated AAA.......

Überflüssig zu erwähnen das die US Staatsschulden noch immer mit AAA bewertet werden......

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.

Lewis Black "America On Sale"

The "strong $ policy", the fiscal discipline, the hawkish Fed & and the high savings rate is (finally )working...... More video related links from today American ‘Deal Deficit’ Gets Wider & Tokio Marine Will Acquire Philadelphia Consolidated for $ 4.7 billion. Much more to come......

Sieht so aus als wenn die jahrelange "Strong $ Policy", die strikte Haushaltsdisziplin, die gestrenge Fed & und die hohe Sparrate sich endlich auszahlen...... :-) Hier noch mehr Meldungen aus den letzten 24 Stunden die perfekt zum Video passen American ‘Deal Deficit’ Gets Wider & Tokio Marine Will Acquire Philadelphia Consolidated for 4.7 billion . Dieser Trend dürfte noch lange anhalten......

Investors Hit $10bn Loss In US Financials

Never catch a falling knife.......It remains to be seen if the Sovereign Wealth Funds won´t double down..... :-) Just watch todays news on Barclays....... It seems like they still havn´t lost enough..... At least they bought into a strong currency..... ;-)

Greife nie in ein fallendes Messer..... Bin wirklich gespannt ob sich die staatlich kontrollierten Fonds wirklich ernsthaft zurückhalten. Das Beispiel Barclays zeigt momentan noch ein anderes Bild. Mann könnte auch sarkastisch sagen das hier der "Anfängerfehler" gemacht wird und die Positionen "verbilligt" werden..... :-). Die Verluste sind anscheinend noch nicht schmerzhaft genug..... Immerhin haben Sie sich dank der "gelungenen" Investment in eine "starke" Währung eingekauft ...... ;-) Investors hit $10bn loss in US financials FT
Investors who backed US financial companies’ drive to raise much-needed capital are sitting on nearly $10bn in paper losses amid a continued slump in the sector’s shares, a Financial Times analysis shows.

The negative returns suffered by investors are likely to make it more difficult and expensive for US financial groups to tap equity markets if, as expected, the credit crunch forces them to raise more capital.

“Raising funds from equity investors is becoming increasingly complicated because the performance of financial stocks during and after the spate of fund-raisings has been so abysmal,” said a Wall Street banker who advises institutions.

The setbacks suffered by equity investors come as sovereign wealth funds – a rich source of capital at the beginning of the crisis – have moved to the sidelines after seeing the value of investments fall in companies such as Citigroup, Merrill Lynch and Morgan Stanley.

Investors who bought the $65bn-plus in common and convertible shares issued by large US financial institutions since last October have seen their total investments fall by more than $9.7bn – a negative return of about 15 per cent – according to an FT analysis of Dealogic data.

> I doubt that all of the SWF were as smart as the following....

> Glaube kaum das alle SWF ähnlich weitsichtig wie der nachfolgende agiert haben.....

FT Abu Dhabi’s Adia, meanwhile, had structured its November investment in Citi in a way that gave it the right to go back and strike better terms on its deal, heightening its downside protection to match the terms GIC and Kia struck with Citi.

> Lets hope for them that this kind of term is still in place during the next few capital raising attempts from Citi.... :-)

> Bleibt zu hoffen das diese Kalusel auch noch nach der 3. und 4. Runde von Kapitalerhöhungen bei Citi in Kraft ist...... :-)

Those who took part in the $1.2bn recapitalisation of the bond insurer Ambac last March are nursing paper losses of more than 70 per cent. And fund managers who backed a $1.2bn capital raising by fellow monoline insurer MBIA have seen their investment shrink by 60 per cent.

Shareholders in Citigroup who thought that the sharp fall in the stock made last month’s $4bn share issuance a buying opportunity face a 24 per cent loss.

Of the 20-plus fund raisings by US banks and insurers since the onset of the crisis, only two – by the student loan provider Sallie Mae and the regional lender Sovereign Bancorp – show a small positive return

What A Difference A Week Made....Credit Suisse Discovers Another $ 2.85 Bilion "Fair Value Reduction"

As one who has listened to the entire conference call from Credit Suisse just one week ago i can assure you that this will spook the markets. Credit Suisse was besides Deutsche Bank and Goldman Sachs viewed as one of the big winners during the turbulence. But there was always doubt that their numbers might be too good to be true...... Credit Suisse is proving that this might be the case..... Should be very bad news for the confidence in the marketplace overall...... I assume the "arrogance" from the Credit Suisse management won´t be as obvious as during the last call...... Stock tanking 7 percent......

Als einer der sich vor einigen Tagen die Telefonkonferenz angehört at bin ich mir sicher das diese Meldung hohe Wellen schlagen wird. Bisher galt die Credit Suisse zusammen mit der Deutsche Bank und Goldman Sachs als einer der Gewinner der Marktturbulenzen. In der Vergangenheit sind immer wieder Zweifel aufgekommen ob "die Zahlen nicht zu gut sind um wahr zu sein" ...... Credit Suisse liefert hier eine Steilvorlage für diese Vermutung......Ich bin mir zudem sicher das die "Arroganz" von Seiten des Managements während der nächsten Telefonkonferenz sicher nicht wieder so ausgeprägt sein wird wie letzte Woche .... Aktie zur Eröffnung 7% tiefer......

Thanks to Randy Galsbergen

Credit Suisse Further to its commitment to provide transparency, Credit Suisse today announced that in connection with the operation of ongoing control processes, it has undertaken an internal review that has resulted in the repricing of certain asset-backed positions in its Structured Credit Trading business within Investment Banking.

The current total fair value reductions of these positions, which reflect significant adverse first quarter 2008 market developments, are estimated at approximately USD 2.85 billion (having an estimated net income impact of approximately USD 1.0 billion).

In the first quarter to date, we estimate we remain profitable after giving effect to these reductions. The final determination of these reductions will depend on further results of our review and continuing market developments. We will also assess whether any portion of these reductions could affect 2007 results. Finally, our internal review, which has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business, is continuing.

> Here the Full Year Results from Feb. 12th & Webcast

Qatar was maybe a little bit premature....

Sieht ganz so aus als wenn einige Investoren heute leicht erhöhte Temperatur haben werden.....

Qatar fund buys Credit Suisse stake

The QIA’s move comes after Credit Suisse posted robust fourth-quarter results underscoring its resilience during the credit crisis,......

UBS: $14 Billion in Mortgage Write Downs

What a mess. Seems their 8 week old forecast was $ 4 billion too low. Lets hope the $ 12 billion capital injection from Singapour & the Middle East at fire sale prices will be still enough after the next forecast is hitting the tape..... I think the image as a rock solid Swiss banking giant is now gone and it will take a very long time to bring the once almost perfect reputation back. I assume that this debacle will also infect the much more important wealth management division. A break up is more than likely....

Was für ein Debakel. Sieht so aus als wenn die 8 Wochen alte Prognose mal eben um satte 40% oder $ 4 Mrd verfehlt worden ist. Bleibt die vage Hoffnung das die 12 Mrd $ Kapitalspritzen aus Singapur und dem mittleren Osten auch noch nach der nächsten Prognose immer noch ausreichend sind....... Der Ruf als solide schweizer Bankenadresse dürfte auf Jahre hinaus vernichtet worden sein. Ich kann mir kaum vorstellen das dieses Disaster ohne Auswirkungen auf die Vermögensverwaltung ( die mit abstand wichtigste Sparte ) bleiben wird. UBS wird wohl in der jetzigen Form die nächsten Jahre kaum überstehen.

FT Alphaville UBS, Europe’s largest bank by assets, reported a record loss after about $14bn of writedowns on assets infected by subprime mortgages in the US, reports Bloomberg on Wednesday.The fourth-quarter net loss of 12.5bn Swiss francs ($11.4bn) will result in a full-year loss of about CHF4.4bn, the Zurich-based bank said in a statement on Wednesday.

UBS posted its first annual loss since the company was created through a merger a decade ago, and the Q4 loss was bigger than the record declines reported earlier this month by Citigroup and Merrill Lynch. The collapse of the US subprime mortgage market has led to more than $130bn of losses and markdowns at securities firms and banks since June, notes Bloomberg.

UBS reported about $12bn of losses directly linked to the subprime market and an additional $2bn for positions related to the US residential market. The company said its Tier 1 capital ratio, a measure of financial strength, was 8.8 per cent as of December 31, reported Bloomberg.

Citigroup Still With $ 37.3 Subprime Exposure.....

I think it is interesting to read the Citigroup Results in detail. Make sure you see this Excellent Presentation. Lots of data. I have put the focus on subprime exposure and credit costs. Lets hope their internal models for valuing these securities has improved during the past 2 quarters ( UPDATE & hat tip via Calculated Risk"Citi is basing their CDO loss forecasts on house price decline of about 7% each for each of the next two years")...... But i think with the new CEO in charge there is hope that they are now more realistic. He normally has no incentive to underestimate. But after all i have seen from this company ...... Here are my earlier takes on Citigroup and here the details to the $14.5 billion of capital infusion. Nice to see that they are still paying a dividend ...... What a farce!

Ich denke es lohnt sich die Citigroup Results im Detail durchzulesen. Kann jedem diese excellente Präsentation ans Herz legen. Haufenweise Infos die ein Bild geben was in den einzelnen Märkten so vor sich geht. Ich habe hier setllvertretend mal die Zahlen zu Subprime und den explosierenden Kreditkosten herausgepickt. Bleibt zu hoffen das die internen Modelle auf denen die Wertermittlungen basieren in den letzten 6 Monaten besser geworden sind ( Update & Dank an Calculated Risk "Citi is basing their CDO loss forecasts on house price decline of about 7% each for each of the next two years )...... Mit dem neuen CEO an Bord bestehet aber zumindest die Hoffnung das man jetzt näher an der Realität ist. Üblicherweise neigt der neue CEO dazu bei der ersetn Ergebnisveröffentlichung unter eigener Verantwortung klar Tisch zu machen. Aber nach allem was ich bisher von diesem Unternehmen gesehen habe....... Hier meine früheren "Gedanken" in Sachen Citigroup. Zusätzlich hier die Details zur $ 14.5 Mrd Kapitalspritze. Lächerlich das im gleichen Atemzug noch immer eine Dividende gezahlt wird.....

Sildes taken from the Excellent Presentation

Credit costs increased $5.41 billion, primarily driven by an increase in net credit losses of $1.56 billion and a net charge of $3.85 billion to increase loan loss reserves.

-- U.S. consumer credit costs increased $4.1 billion, comprised of $689 million in higher net credit losses and a net charge of $3.31 billion to increase loan loss reserves. The $3.31 billion net charge compares to a net reserve release of $127 million in the prior-year period.

The increase in credit costs primarily reflected a weakening of leading credit indicators, including increased delinquencies on 1st and 2nd mortgages, unsecured personal loans, credit cards, and auto loans. Credit costs increased also due to trends in the U.S. macroeconomic environment, including the housing market downturn, and portfolio growth.

UPDATE: Here are some more links with very good insights / Hier einige andere gute Link mit meiner Meinung nach guten Meinungen

Citi Dividend, Future Prospects and Credit Cards Calculated Risk

Live-Blogging the Citigroup Earnings Call WSJ

Cost of Capital "Ratchets Up" at Citigroup and Merrill Mish

Citi confirms $18bn Q4 writedown; signs of consumer stress FT Alphaville

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