Banque du Liban (BDL), Lebanon’s central bank, is preparing an economic stimulus to help the struggling Lebanese economy, which is under pressure from the ongoing unrest in Syria, BDL Governor Riad Salameh said. Incentives for loans directed at the housing, productive and renewable energy sectors were on the agenda with further details to be announced at the end of the year. Salameh says he expects gross domestic product growth in Lebanon to stand at 2 percent, above Finance Minister Mohammad Safadi’s forecast of a 1 to 1.5 percent growth. The governor expects inflation to reach 6 percent in 2012 and deposit growth to stand at 7 percent, mainly driven by domestic deposits. For the first nine months of 2012, total deposits in the banking sector grew by 5.4 percent.
First Iraqi IPO since Saddam
The first initial public offering of an Iraqi company on the country’s stock exchange since the reign of Saddam Hussein is due to take place at the start of 2013. Asiacell, with 9.5 million users, will start trading on the Iraqi Stock Exchange (ISX) by listing one quarter of its shares between January 3 and February 2 with the share price to be determined by December 25, news agencies reported on December 2, after the ISX placed a brief announcement on its website. Qatar Telecommunications owns 60 percent of Asiacell, after deploying $1.47 billion to double its stake in 2012, and the listing is expected to raise about $1 billion. Asiacell is one of the three Iraqi telecom operators — the other two being Zain Iraq, a unit of Kuwait’s Mobile Telecommunications Company, and France Telecom-affiliate Korek — required to list 25 percent of their stock as part of their 2007 awarding of operator licenses, but all three companies missed the initial deadline of August 2011. Once achieved, the listing of the telecom companies is expected to double the market capitalization of the stock exchange that stood at approximately $4 billion in December 2012.
$1.5 billion Eurobond swap
All Eurobonds maturing in 2013, totaling $1.52 billion, were exchanged for new and longer-dated bonds by the Lebanese Republic. An $875 million bond with a coupon of 9.125 percent, maturing in March 2013, and a $650 million bond with a coupon of 8.25 percent, maturing in June 2013, were both renewed through the issuance of three Eurobonds: a $525 million Eurobond maturing in November 2018 with a 5.15 percent coupon, a $500 million Eurobond maturing in January 2023 with a coupon of 6 percent — the lowest rate ever on a Lebanese Eurobond for a maturity exceeding 10 years — and finally a $500 million Eurobond maturing in November 2027 with a coupon of 6.75 percent. The Eurobond exchange was led by Byblos Bank, Blom Bank and Credit Suisse.
Shipping giant restructures debt
The world’s third-largest container shipping group, CMA CGM, headed by Lebanese Jacques Saade, reached a deal to restructure debt worth $4.6 billion. According to Michel Sirat, chief financial officer of the French shipping company, an agreement was reached with 72 banks whereby a $400 million tranche of debt maturing February 2013 was extended by two years. The group’s covenants were also amended, tying them to the company’s gearing instead of its profitability. CMA CGM has also agreed to get rid of some of its assets, mainly the sale and leaseback of 100 vessels among the 394 it operates, as well as the sale of a 49 percent stake in Terminal Link, its terminal operating business with operations worldwide. The Saade family owns 70 percent of the container shipping giant. Earlier in October, the family gave up 10 percent of the group for a $250 million injection, shedding 6 percent to Fonds Stratégique d’Investissement, a French state-owned fund, and 4 percent to Turkish-based Yildirim Group.
H.S.B.C and Standard Chartered pay heavy fines to settle U.S. investigation
UK-based banking behemoth HSBC has agreed to pay a record $1.92 billion to United States authorities to settle a money-laundering case that accuses the bank of transferring billions of dollars on behalf of nations under sanction, such as Iran, and on behalf of Mexican drug cartels. The $1.92 billion penalty includes $1.25 billion in forfeiture — a record fee — and $655 million in civil penalties. “We have said we are profoundly sorry for them, and we do so again,” said Stuart Gulliver, the bank’s CEO. HSBC’s settlement follows on the heels of that of another UK-based bank, Standard Chartered, which agreed to pay $327 million to settle accusations of money laundering on behalf of four countries subject to US economic sanctions, including Iran and Sudan. This charge came on top of the $340 million fine Standard Chartered paid in August 2012 to New York’s state banking regulator over Iranian sanctions.
A 0.6% growth forecast
Lebanon’s economy is forecast to grow just 0.6 percent in 2012, down from 1.8 percent in 2011 and 7 percent in 2010, due to clashes and political disputes linked to Syria’s ongoing unrest, according to the Institute of International Finance (IIF), the world’s global association of financial institutions. “If Lebanese politicians were to reach a consensus on effective government, improve domestic security and implement fiscal and structural reforms, then the 2013 GDP forecast could reach 3.5 percent at best,” said Garbis Iradian, deputy director of the IIF’s Africa and Middle East department. The IIF also expects Syria’s economy to shrink by 20 percent in 2012 and to see its foreign reserves depleted by the end of 2013. Since the start of the strife in March 2011, inflation has risen by 40 percent and the Syrian pound’s official exchange rate against the dollar is down 51 percent, according to the IIF.
N.C.B. GOES IRISH
Saudi Arabia’s largest asset manager, NCB Capital, is launching a range of Islamic mutual funds domiciled in Ireland in an effort to widen its investor base and appeal to emerging market investors. The firm has established two funds, which invest in Saudi Arabian and GCC equities and they have plans to launch other funds, including one that will invest in sukuk, or Islamic bonds. NCB Capital, part of unlisted National Commercial Bank, which already manages $12.1 billion in assets, is targeting each fund to have between $50 million to $100 million in assets. The funds, which have institutional and retail share classes, will be distributed to investors in Turkey, Malaysia and Indonesia as well as European and Gulf regions and will be registered as UCITS (Undertakings for Collective Investment in Transferable Securities), a European regulatory framework that allows funds to be sold in any European Union country after approval from a single member state. UCITS can also be sold outside of Europe, with NCB Capital planning to market the funds internationally in conjunction with global asset manager Amundi, with whom it entered into a strategic alliance in March.
