Home The Buzz Morning briefing: 25 Oct 2012

Morning briefing: 25 Oct 2012

Abu Dhabi debt concern, plus other stories

by Executive Staff


The outlook for Lebanon’s banking system remains negative, Moody’s Investors Service said in a new Banking System Outlook published Wednesday.

It added that the main drivers of the outlook are the expectations of weak economic growth and business sentiment in both 2012 and 2013. This weakness is blamed on escalating political unrest and an acceleration in the formation of problem loans related to lending in the domestic market and in countries undergoing political transition or economic slowdown. Declining net profitability, primarily resulting from higher provisioning needs and subdued fee-generation, was also cited.

“The operating environment for banks will remain challenging over the 12-18 month outlook period due to weak growth, the poor performance of sectors key to banks’ asset quality and the factious domestic politics,” the report said.

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An official document clarifying ultimate responsibility for new debt issuance by Abu Dhabi's government-related entities aims to eliminate any risk of a Dubai-style debt crisis in the emirate.

The document introduces centralised mechanisms to manage debt and restraints on borrowing by quasi-sovereign bodies. But it does not change the level of state support available to Abu Dhabi's key development vehicles, bankers and analysts said.

The document, dated August 7 and delivered to state-owned entities by the Executive Council, which assists the ruler of Abu Dhabi, says the government will only be responsible for debt formally guaranteed by the council or Abu Dhabi law if the borrower is unable to meet its obligations.

More from Arabian Business


Kuwait said on Wednesday that Iraq will complete payment of a $500 million settlement of an airline dispute between the two nations by the middle of next year.

A royal decree ratifying the settlement signed by Kuwait Emir Sheikh Sabah al-Ahmad Al-Sabah states that Baghdad will pay $200 million in the first six months of 2013.

The remaining $300 million will be deposited in a special bank account and transferred to state-owned Kuwait Airways Corp.

The decree said the deal between the two neighbours' airlines was signed in Kuwait City in July and officially ends a 22-year old dispute which began after Iraqi troops invaded Kuwait in 1990.

More from The Daily Star


Iran's intelligence chief says up to 50 people have been arrested in connection with the decline in the value of the national currency and the chaos that followed the slide.

Heidar Moslehi says those detained have been accused of cooperating with the country's enemies to create currency "disruptions" and economic instability. He spoke after a Cabinet meeting Wednesday.

Iran's rial has lost nearly 40 percent of its value against the U.S. dollar this month. The rate Wednesday – about 31,500 rials to the dollar – was a bit better than the record low of 35,500 rials to the dollar earlier this month.

More from The Telegraph



The government of Syrian President Bashar al-Assad has indicated to Russia that it will accept UN-Arab League peace envoy Lakhdar Brahimi's proposal for a Muslim holiday ceasefire in Syria, Moscow's UN envoy said on Wednesday.

"We have had indications that they (Syria's government) are accepting the proposal of Mr. Brahimi," Ambassador Vitaly Churkin told reporters after a closed-door meeting of the 15-nation Security Council during which Brahimi briefed council members via video link from Egypt.

Brahimi told council members that a final announcement Of a ceasefire with rebels was expected Thursday. Churkin seemed to confirm remarks Brahimi made earlier on Wednesday in Cairo, when he said the government had indicated its acceptance of the proposed truce.

More from Reuters


Palestinian rebels held fire overnight on Thursday and Israel refrained from air strikes as an informal truce brokered by Egypt appeared to take hold following two days of violence along the Israel-Gaza border.

Palestinians had launched dozens of rockets into Israel over the preceding two days and Israel conducted a number of air raids on the coastal enclave, raising fears of a prolonged, bloody confrontation between the two sides.

An Israeli military spokeswoman said the last known rocket was fired from Gaza on Wednesday at 8.00 p.m. (2 p.m. EDT).

More from Reuters


And finally…

Many in the Middle East believe Barack Obama failed to deliver on promises of a new US approach in the region but still prefer him to presidential rival Mitt Romney, who they see as too close to Israel and too keen to project US military might.

Whoever wins the Nov. 6 election faces a knot of regional issues that will not be easy to unravel. World powers are split over the Syria conflict, a row about Iran’s nuclear ambitions rumbles on and Palestinian-Israeli peacemaking is going nowhere.

Compounding the challenge, the Middle East is a region where perceptions of fading US influence have been hardened by Arab uprisings that have toppled dictators who were longtime U.S. allies, bringing Islamists in their place.

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