Executive Magazine

Dubai and Halliburton hardly an ideal match, business is business

by Thomas Schellen May 1, 2007

written by Thomas Schellen

When US oil services behemoth Halliburton said this springit was moving its corporate headquarters to Dubai, exudationof praises ensued at full throttle. Maestro developerMohammed Alabbar of Emaar grandeur for example recentlycited the move as proof that a global city is underconstruction in Dubai with no real estate bubble about toburst.

Local and regional commentators from academia and media usedthe occasion to hail Dubai’s new international appeal andits welcoming attitude to foreign businesses, especiallywhen compared with the, at best, lukewarm US reception ofUAE-based companies to American shores. Even the soberFinancial Times called it the emirate’s biggest marketingcoup yet, even if it did allude to Halliburton’s reputationfor untoward corporate behavior.

As a romantic fling, the affair between the US corporateanimal and the overachieving emirate would be worth chasingby gossip columnists and paparazzi—were it not for onemissing element: emotion. It is more a marriage ofconvenience and a dubious one at that. It is a questionableunion and one that will not advance the corporate culturefor which Dubai wants to be known.

Halliburton knows Dubai because it has maintained an officethere since 1991. Having a single executive holding thepositions of chairman, president, and CEO, Halliburton alsohas at least one corporate culture aspect in common with agood number of companies in the GCC. But when thetri-functional David Lesar in March announced his migrationfrom steamy, hot Houston to steamier, hotter Dubai, he spokeentirely the lingo of more business growth, better customerrelations in the “Eastern Hemisphere”, and bringinginnovative “rotary steerable tools” to the company’scustomers in the oil and gas business.

There was not a single hint from Mr. Lesar of any emotionalattachment to the city of Dubai of the sort that top MiddleEastern corporate heads often freely profess, and definitelyno signal that Halliburton wants to be a model for goodgovernance, aspiring to widen the ranks of multinational andlocal companies questing to make Dubai a regional center ofsocially responsible corporations.

In fact if the truth be told, American perception actuallypointed in the opposite direction. Upon hearing the news, USpoliticians and watchdog organizations flooded the publicforums with allegations that Halliburton might try to cutits tax burden through the relocation, shift jobs abroad,avoid scrutiny of its supposedly Un-American activities inIran, or even escape from scathing inquiries into its pastsins of corruption and allegations that is was ripping offthe US army in Iraq via its subsidiary, KBR.

The company immediately acted to deny those accusations,emphasizing that it would remain registered in Delaware, payits taxes, and hire more employees in the US. It alsocompleted its separation from KBR last month and announcedthat it will end its involvement in Iran, which Halliburtonhad managed through a subsidiary registered in the CaymanIslands and working from, yes, Dubai.

But distrust of Halliburton looms large in the US, whereself-appointed watchdog groups included the firm in lists ofthe ten worst corporate criminals of the 1990s and as one ofthe ten worst companies in 2004 and 2005. ConfirmedHalliburton haters also pointed out that Dubai has noextradition treaty with the US.

Part of the over-enthusiasm in cheering Halliburton’s officemove may be rooted in the fact that Dubai is a regionalbigwig but by no means a global contender yet. This showsfrom its position on many of the global, from the WorldBank’s Doing Business ratings (77th) to the World EconomicForum’s Competitiveness Index, where it ranked 29th amongthe 40 most developed economies. Even though it was theindex’s top Arab country, it was still near the top of thebottom third for competitiveness in the high-income peergroup. It also doesn’t help Dubai’s cause to be rated—fairlyor unfairly—as 74th and only just “moderately free”in theHeritage Foundation’s ranking of 153 countries for theireconomic freedom.

Dubai has taken many good steps and it is at a point whereit needs to implement some corrections rather than gettingexcited about another corporate addition to its overcrowdedspace. There are already more than enough companies whoopened shop in Dubai and its various free zones with motivesthat have little to do with a vision of building acosmopolitan center for business and leisure and more to dowith being somewhere that a foreign company can avoidquestions or chase money. Dubai should refocus on the bestpractices and honest aims it set out to pursue not so long ago.

Thomas Schellen is business editor for Zawya Dow Jones in Beirut

May 1, 2007 0 comments

Comment

Chapter 7 and the tribunal

by Nicholas Blanford May 1, 2007

written by Nicholas Blanford

Despite the hesitation of the United Nations secretariat andthe warnings of the Lebanese opposition, the adoption of theInternational Tribunal under a Chapter 7 mandate appearsalmost certain.

The government and its supporters have stepped up efforts tohave the tribunal adopted under Chapter 7, believing thatonce it becomes a fait accompli it will break the politicaldeadlock with the opposition.

There is much uncertainty over the powers and legalparameters of the tribunal which has only helped exacerbatethe tensions surrounding its formation. Hizbullah says it isworried that the US—the main external driving force behindthe tribunal—will use it as a political weapon to settle oldscores, such as reopening “files” dating back to the suicidebombings and kidnappings of the 1980s. Those fears are notwholly without foundation. One senior Christian politiciantold me that was exactly what he hoped would happen once thetribunal is formed so as to undermine Hizbullah’s oppositionrole. Former Prime Minister Omar Karami has suggested thatthe tribunal’s powers be expanded to include the murder ofhis brother, Rashid. If Rashid Karami’s death is included,then there is no end to the number of assassinations,massacres and killings that could end up before thetribunal.

UN officials, however, have said that the tribunal willlimit its work to the series of murders, attempted murdersand bombings that began in October 2004.

International tribunals are a relatively recent phenomenonin international law, a result of greater cooperation amongglobal powers after the polarization of the Cold War came toan end. The first since the Nuremburg and Tokyo tribunals in1945 and 1946 was the tribunal for the former Yugoslavia in1993. Since then numerous ad hoc tribunals have been formedto deal with international war crimes such as those forSierra Leone, Cambodia and Rwanda among others. Critics ofthese tribunals claim they are politically motivated and aform of victor’s justice. Certainly, there can be littledoubt that Lebanon’s tribunal owes its imminent existence tothe exigencies of United States policy toward Syria ratherthan an impartial attempt to discover and prosecute thekillers of Rafik Hariri and his companions.

Much of the ambiguity surrounding the Lebanese version isthat it is a hybrid of several other international tribunalsrather than a direct copy and will be treading new legalground. For example, the tribunals for the former Yugoslaviaand Rwanda were adopted under Chapter 7 from the beginning.There were no local judges sitting on the tribunal andinternational law was adopted for both. The tribunal forSierra Leone included a token local presence and was heldin-country although international law was adopted again. Themixed Lebanese International Tribunal will have equalparticipation of local and foreign judges and will sit underLebanese law (with the exception of the death penalty).Unlike its Sierra Leonean counterpart, however, the Lebanesetribunal will not sit in Lebanon.

Furthermore, the original intention was to establish thetribunal under a bilateral treaty between Beirut and theUnited Nations. The recourse to Chapter 7 only arose whenthe passage of the treaty through parliament became blocked.

Nicolas Michel, the UN’s top legal adviser, has suggestedthat even if the Security Council approves the tribunalunder Chapter 7, it will not be put together until the UNcommission concludes its investigation. That statement wasintended to reassure critics of a Chapter 7 tribunal, buttheoretically the tribunal can begin operating as soon as itis approved by the Security Council, a location chosen andthe judges selected. For example, the tribunal could begintrials of the four generals presently languishing withoutcharge in Roumieh prison. They were detained nearly twoyears ago on the advice of Detlev Mehlis, the then head ofthe UN investigation commission. While, their detention waslegally permissible, their indefinite incarceration withoutcharge nor arraignment in a court of law is not.

In normal circumstances, there should be no need for thetribunal to have recourse to the raft of coercive measuresat the disposal of the UN Security Council under Chapter 7.Indictments issued by the tribunal are legally binding underinternational law irrespective of Chapter 7.

However, Chapter 7 could be applied if any party refused tohand over individuals indicted by the tribunal. AlthoughArticle 42 of Chapter 7 permits the use of military force toimplement Security Council decisions, the UN could opt forthe softer measures contained in Article 41 such as economicsanctions and the severance of diplomatic relations. Even ifthe Security Council was unable to forge a consensus onusing military force, the indicted persons would be unableto travel internationally and could face a freeze of theirinternational assets. However, the down side is that thewhole legal process could grind to a halt, the prosecutionspending, until those indicted are turned over or handthemselves in.

Such is the case with Ratko Mladic and Radovan Karadzic whohave been under indictment by the tribunal for the formerYugoslavia since 1995. The Serbian authorities agreed toturn them over, but both men remain at large, apparently inSerbia, and their prosecution consequently pending.

Nicholas Blanford is a Beirut-based reporter and author of Killing Mr Lebanon: The Assassination of Rafik Hariri andits Impact on the Middle East.

May 1, 2007 0 comments

Comment

Region needs real journalism

by Fadi Chahine May 1, 2007

written by Fadi Chahine

Local and foreign observers across the MENA region are inconsensus that the region lacks a key ingredient to anythriving democracy: a pool of professional journalists. Thishas created a drought of oversight and accountability.

While the problem is known, there is hardly any evidenceit is being addressed. Even the institutions that one wouldturn to first, the region’s universities, have failed intheir task. The lack of journalistic standards in the regionhas allowed those universities and colleges that do offer adegree in journalism—which are few and far in between—tograduate students with little practical know how and writingskills based on the standards used in the developed world.

Whether the education was Arabic, English or French, theacademic training afforded to journalism students does notcome close to being equal to the education and trainingavailable in more developed countries, which means that mostof these colleges graduate wannabe journalists.

Governments of the region are keen to maintain theirofficial news agencies, and some of these agencies havestaff sizes rivaling those of international wire services.However, the state influence over the media has been drivenby a desire to control and is a huge obstacle to thedevelopment of journalism as democratic regulative or fourthestate. The dominant culture of unquestioning submission tothe state and any kind of institutional authorityexacerbates the problem. From Lebanon to Sudan, politicalaccountability and scrutiny is nil in the region.

In most countries, governments have either neglected ordeliberately avoided creating training programs to improvethe ability of Middle Eastern and North African journaliststo report effectively about politics, business and economicsand increase understanding among Arab populations of theseissues. Press associations and journalist unions also havenot delivered impulses that would stimulate the creation ofa press corps deserving of the name.

Finally, by not doing enough to nurture young journalistsand reward them for thorough inquisitive reporting anddisclosure of political, social, or corporate wrongdoings,media owners and publishing companies share part of theblame for the absence of a professional press corps. Thus,today very few journalists take a serious stand on issuesrelated to the welfare of the public and maybe one in athousand journalists makes an attempt to hold governments orgovernment officials accountable for their misdoings.

A good number of the region’s journalists find it hard toseparate being responsive from caving, being accountablefrom being a tool, being sensitive from being weak.Journalists are meant to be, by definition, eager forinvestigations of government misconduct. That is supposed tobe their purpose, embedded in their DNA.

A recent study conducted by the Amman-based Higher MediaCouncil (HMC) on the training requirements for members ofthe media showed that journalists lacked the most basicskills of the craft, including proper training for writingand editing skills, use of languages, computers and theInternet.

The study revealed that 35% of media practitioners havenever been involved in any training courses, while only22.7% of those working in the sector have a degree injournalism. Most writers have less than 10 years ofexperience.

In recent years, media institutions like Al Jazeera andinternational news organizations like Reuters, as well asNGOs such as the International Journalism Institute havemade efforts to offer workshops and training programs forpractitioners of journalism in the Middle East. Journalismprograms at some universities receive token support from theUN or have linked up with international programs. But goodas they may be, these efforts are not enough to create apool of journalists who are ready and primed to tackle thebig issues facing the region’s countries.

To start doing this, the Middle East needs a trainingenvironment where centers in all major cities provide thosewho want a career in journalism the understanding of therequired knowledge and skills. This training environmentwill only succeed if it is centered on building journalisticskills that are rooted in practice and suited to addressingthe challenges which working writers face daily in theirwork. It must also empower journalists in building a newjournalistic culture that serves the larger needs of theMENA region.

It is now more than ever that we need new writers, editorsand readers to step forward and speak up. Journalism in theMENA region is calling and good journalists to representpeople who do not have a voice in society. The press mustgive voice not only to those in power, but also to those whoare not being heard.

We need more active inclusion of journalists in continuousmonitoring of governments work, further understanding offree access to information and conflict of interest conceptsand better integration of legal frameworks in journalisticpractice. If we are able to achieve this in the MENA regionthen there is a chance that the media can be triumphant.

Fadi Chahine is the Managing Editor of Zawya Dow Jones in Beirut.

May 1, 2007 0 comments

Comment

The Blonde on the Billboard

by Rana Hanna May 1, 2007

written by Rana Hanna

You must have seen her. She’s blonde, fair andclear-skinned, blue-eyed with a perfect pout and an evenmore perfect nose. She’s staring at you frompractically every billboard in Beirut and urging you to takeout a “Plastic Surgery Loan” from First National Bank, sothat you too can look perfect.

Going under the knife to give you that edge—personally orprofessionally—is no longer a taboo. Beauty is no longergenetic luck. It has become attainable and affordable, andFirst National Bank have just made it even easier to getthere.

In fact they’ve made it very easy. As long as you earnover $600 a month and can afford to pay it back within 24months (with 6% interest), the patient-to-be can borrow upto $5,000 within 48 hours, with no down-payment required.You can have any procedure you want, from laser eye surgeryto orthodontics via laser hair removal and botox. Hate thatgut? Get rid of it!

The ad itself, part of a bigger brand awareness campaign, issomething of a marketing coup and has the whole towntalking. Among the hundred or so daily calls that the bankhas been receiving since the launch of the campaign, areinquiries from CNN and the BBC, who, like everyone else,noticed the blonde on the billboard and decided it was aquirky story.

While many who believe that we should not tamper with whatHe gave us, or feel that as a society we are heading toShallowsville, it would not be fair to accuse First Nationalof exploiting vanity—buying a car is also a style statement.It is merely responding to a demand that reflects the needsof a population that places high value on looking its best.Each year the Lebanese spend a fortune on cosmeticprocedures and First National expects to approve hundreds ofloans. And it’s not only the women. Over a third of thecalls that the bank has received have been from men.

According to FNB, the product is not new and had been indevelopment since 2004 and was scheduled to launch on 28July 2006. The project was delayed because of the summer warbut after the guns fell silent, the bank noticed that demandhad not diminished; quite the contrary, it increased.

It transpired that the war had proved the perfect window fora quick surgical procedure. Social events were kept to aminimum—a combination of decorum and danger had seen tothat—and so there was ample time to recover from a minorprocedure. Others had more pressing needs, especially thoseinjured during the war—burns and facial disfigurement andthe like—and who could not pay for a procedure without aloan and FNB have gone to some lengths to explain this.

Still there is the billboard picture of the perfect blondestaring at me telling me that I can now get the makeover ofmy dreams and live the life I’ve always wanted.

It’s nice to be a looker but is it a factor in success? Wellapparently yes. Many studies have shown a positivecorrelation between beauty and professional success, bettermarketability, better positions in the workplace, highersalaries and even stronger political prospects (baldleaders, for example, are perceived as lacking in that finaldollop of charisma).

In Lebanon, plastic surgery is available on every streetcorner, it is relatively affordable and the doctors areexcellent. And with the country so depressed at the moment,it’s probably a good idea to give yourself a littlesomething to feel good about. The Lebanese have proved, onceagain, to be above all hardship. The trophy wife mantra usedto be “when the going gets tough, the tough go shopping.” Inour case, when the going gets tough, we sign up forRhinoplasty.

RANA HANNA admits to having had plastic surgery

May 1, 2007 0 comments

Comment

Ruffing it, Bahrain style

by Paul Cochrane May 1, 2007

written by Paul Cochrane

A recent trip to Bahrain, what should have been a fairlyrun-of-the-mill interview with a CEO to discuss the launchof the Middle East’s first sports car plant turned intosomething rather different from the usual chat over coffeein a hotel lobby.

I was informed just an hour before the interview by theassistant to Alois Ruf, the owner of Germany’s highperformance sports car company Ruf, that I was to meet himout at the Bahrain International Circuit (BIC), home of theFormula 1 racetrack and the location for Ruf’s $20 millionfactory.

When I arrived at the VIP section of the Formula 1 track,my eardrums were subjected to the magnificent roar of adozen Lamborghinis straining at the leash. I hadunexpectedly gate-crashed the Speed Trip, one of the BIC’s200 annual events, at which owners of super cars and Ducatimotorbikes use their machines for what they were meant for:pushing the pedal to the metal and not worrying about overlyzealous traffic cops.

Lined up in the pit stop off the racetrack were the Ruf RKCoupe and Ruf Rt 12, which both looked pretty much likeunmarked Porsche 911s. This was not far from the truth, withthe chassis modeled on the Porsche, but everything else,from the electrics to the engine, completely refitted andseriously supercharged.

Talking with the head engineer while waiting for Mr Ruf toshow up I asked if either of the Ruf cars could take on oneof the Lamborghinis going hell for leather around the track.“The silver one no, the blue (RK Coupe), sure.” With the RufRK Coupe topping 220 mph and the Ruf Rt 12 reaching a mere189 mph, its no wonder Ruf is highly sought after cars bycar enthusiasts in the know.

In business since 1939, Ruf is not well known outside of caraficionado circles but those who can afford them buy them.

Ruf has had a 20-year relationship with the Bahraini royalfamily, inviting sheikhs over for test drives and servicingmodels at the Pfaffenhausen base in Germany. Indeed, LotharDrescher Ruf-Bahrain’s General Manager used to supervise theservicing of the royal family’s sizeable car pool.

With the Gulf awash in petrodollars, Bahrain close to SaudiArabia, a tax-free haven and with the region’s only F1track, Bahrain was a natural choice for Ruf’s first factoryoutside of Germany.

With plans to manufacture 20 cars a year by 2008, Ruf willsoon be pumping out 100 “boutique super cars” a year by 2012for export worldwide.

Ten days later, I was back in Bahrain for the opening of thefactory and in the short time I had been away the Ruffactory had been transformed, lights flooding out of thewindows into the desert, and pools of water shimmeringaround the entrance.

Following the arrival of Crown Prince Sheikh Salman binHamad Al Khalifa and his entourage of assorted sheikhsdecked out in black abayas, a surprise was in store for the200 guests.

Heralded by the revving of a powerful engine coming frombehind the seated audience a sleek, silver matt sports cardrove up to the stage and out swung Alois Ruf from hiscompany’s latest creation—the $450,000, 375 km/h Ruf CTR3.

If rubbing shoulders with royalty and not having a sizeableenough bank account to afford a car like the CTR3 didn’tinform me of my lowly financial position, nothing can putyou further in your place than not attending the Formula 1,and certainly if one is not watching the grand prix from theBIC’s VIP viewing tower.

“Are you coming to the Formula 1?” asked a rather lovelyBrazilian lady. “It’s so much fun up in the VIP box,mingling with the sheikhs and bumping into walls and PrinceAndrew saying, ‘Ah, here are the Brazilians!’ No? Shame.”

Shame indeed, so I headed for the parking lot chomping on afree cigar to locate my rather staid mode of transport totake me back to Manama.

PAUL COCHRANE is a regional business writer based in Beirut

May 1, 2007 0 comments

Consumer Society

Plastic makes perfect: Beirut banks boost

by Executive Staff May 1, 2007

written by Executive Staff

Money talks,” thus reads the clever ad for the Alfa Blom MasterCard. And money talks all right, as this particular card co-branded with the mobile phone operator offers the card holder 60 minutes of free talk time upon issuing the card and an additional 5 minutes for every $100 spent. The Blom initiative is but the latest addition to Lebanon’s ever growing number of credit cards and incentive schemes.

As general conditions and interest rates among credit cards rarely vary, banks increasingly rely on loyalty programs and consumer incentives to reward existing card holders, and attract new clients. Air miles, chocolate boxes, wine bottles, coffee pots, hair dryers, watches and cash paybacks: you name it, banks offer it … As long as you just use that card.

For nearly 5 years, Blom has offered a more regular loyalty program: as the card holder uses his card to purchase goods, he collects points that can be redeemed for gifts, varying from kids toys to airline tickets. In addition, when purchasing at a selected group of retailers, he automatically takes part in a kind of lottery and he may become the lucky winner of a lucrative gift. In Europe and the US, using the credit card to pay for the smallest items is increasingly becoming the norm. Why not? Somewhere down the line there will be an air ticket.

According to Dr. Gladys Younes, head of BLOM’s Communication and Investor Relations Department, the bank has long resisted entering the co-branded market, as it preferred to work with a group of retailers, rather than a single partner. “The telecommunication industry however, is a consumer magnet in both Lebanon and in the world,” he said.“We have always viewed a co-branded card with a major telecom player as a partnership that can add major value. A brand like Alfa embraces a customer database that is at least as big as ours.”

One of the lowest debts in the world inLebanon

The Alfa BLOM MasterCard is the first of its kind in theMiddle East and seems a perfect deal for all parties involved, as it promotes purchasing and using the BLOMMasterCard, as well as subscribing to the Alfa classic line, instead of buying units.

Currently, there are an estimated 100,000 cardholders inLebanon, with an average credit debt of some $30 per capita, which is one of the lowest ratios in the world. As a comparison, in Saudi Arabia the average debt per credit cardholder is $161, in Britain $5,188 and in the United States$9,312. In other words, the Lebanese credit market still has an enormous growth potential and it should not come as a surprise therefore that banks continue to launch new offers and incentives.

According to Philippe Hajj, Head of Fransa bank’s RetailBanking Division, most credit cards offered by Lebanese banks are quite similar. “What differentiates them is mainly the cost, conditions, and benefit packages related to them,”he said. “That is the reason banks are reviewing their pricing, while adding benefits to their cards.”

Fransa bank recently launched its “Cash-Back” loyalty scheme, which allows card holders to redeem the points collected by credit card purchases by cash money, which will be credited directly to their cards upon their request. For every dollar spent, one gets a point, which in its turn is good for $3 cents. Hajj emphasized however, that point clients may still prefer to redeem their points at MEA, Aishti or MTC touch.

Standard Chartered Bank and Credit Libanais both offer elaborate gift schemes. Standard Chartered offers 100 points for every $100 spent. With 5,000 points, the card holder can start redeeming from a range of household items and other gifts. Credit Libanais offers 10 points for every $100spent. Rewards range from wine to travel insurance and even a home theater.

For its part, Byblos Bank has devsied the Cool Card. No doubt, aimed at introducing younger customers to the benefits of credit cards, it offers retail discounts and enters cardholders into prize draws.

Incentive schemes well-received

According to Alain Hakim, assistant general manager ofCredit Libanais business and marketing development division, the bank’s incentive scheme has been well received, although“cardholders remain mostly oriented towards cash withdrawal rather than purchase settlement.”

Although a potential client would first look at a card’s interest rate and charges, he may be tempted to opt for a credit card that promises him a reward, said Hakim. “A credit card in need can be a friend indeed,” he said. “If a cardholder can be disciplined enough to use his credit card for his day-to-day purchases, while keeping money aside to pay his bills at the end of the month, then it can be a win-win situation.The savvy consumer can earn interest on his savings for that month, while receiving cash back or free-of-charge incentives from the card provider.”

In addition to an elaborate gift scheme, Audi Saradar Bank recently introduced an air mileage program. For every $100spent by Visa or MasterCard, the card holder gets 10 points.With 500 point he or she is entitled to a chocolate box, with 50,000 points a free air ticket to Amman or Cairo.

“Many institutions have implemented loyalty programs, yet few have fully understood the nuances and challenges involved,” said Niovi Daoud of Audi Saradar’s CommunicationsDepartment. “Many believe a good loyalty program can virtually run by itself, that once you’ve set it in motion, you can sit back and enjoy the ongoing success. In reality, we’ve found that programs should be continually modified in order to fit clients’ lifestyles.” To do so Audi Bank offers dozens of different cards and incentive schemes.

Blom Bank’s Younes could not agree more with his Audi Bank counterpart. “The US market, the world’s most developed in terms of credit cards, is composed of 50% co-branded cards,”he said. “The Lebanese market has at least 15 co-branded programs. Are these 15 institutions in Lebanon capable of generating enough volume? For a co-branded program to be profitable, at least 3,000 cards should be generated and sold. Even more, should be generated if the co-branded card is to have generous and often expensive features. That is why we find that many banks issuing co-branded cards are doing so for prestige purposes rather than business reasons.”

HSBC offers its Premier Credit Card holders 3 points for every dollar spent, which can then be redeemed to acquire electronics or luxury goods. However, to obtain a PremierCard one is required to have $75,000 in savings or have a combined credit balance of home loan, savings and other assets of at least $100,000.

According to HSBC’s Cards Executive, Omar Farhat, the bank’s loyalty and incentives program is not meant to be a recruitment program, but meant to reward existing clients and thus build up client loyalty.

“We try to differentiate our card from others mainly through our services,” he said. “So, we offer card holders a24-hours help desk worldwide, as well as a travel insurance that meets requirements for a Schengen visa. In addition to the points scheme, we occasionally do special campaigns, in which we offer card holders such things as cinema or concert tickets.”

Music to their ears!

May 1, 2007 0 comments

Editorial

An honest man, badly drawn

by Yasser Akkaoui May 1, 2007

written by Yasser Akkaoui

While corporate governance continues to be the hot topic ina region with a still-evolving corporate culture, it isinteresting to note that even the supposed arch-exponents ofthe practice sometimes fall foul of the standards theyimpose.

George Bush-appointed World Bank chief and noted neocon,Paul Wolfowitz, appears to have been a victim of a campaignto discredit him over the treatment of his girlfriend, alsoa senior World Bank member, who, to avoid a conflict ofinterest, was found a plumb job at the US State Department.Despite the hullabaloo, the ex-deputy Secretary of State ofDefense, appears to have acquitted himself honorably and Iam sure that many Arab politicians and high ranking figuresare still wondering what all the fuss was about.

But the case highlights two interesting issues: First itshows just how important it is to walk the line in terms ofpersonal conduct and setting an example to all. Second,after the deeply flawed Seymour Hersh feature in thenormally stringent New Yorker, in which he accused the Bushadministration in not doing its homework and funnelingmonies to groups with al Qaeda-esque profiles backed by theLebanese government of Fuad Seniora, it is yet anotherexample of the deep-seated level of anti-Bushfeeling in certain corners of the Americanestablishment.

Wolfie was, as they say in London, stitched-up, even thoughhe did his best to play the collision of his private andpublic life by the book.

The new Arabia

This month we also doff our caps to the tremendous stepsmade state-owned enterprises in Dubai in particular and theUAE in general in turning what could easily has been left asa flabby desert outpost, living off dwindling naturalresources, into a muscular trading giant, real estate tyroand tourist heaven.

Its bilateral economic ties with China and India are aclear indicator of Dubai’s intentions to become a globalplayer by seeking out alliances with 3 billion newcapitalists, while its real estate giants are already atwork in the dragon kingdom, exporting their particular, andspectacular, brand of development know-how. From being anexpat backwater as recently as the early 90s, Dubai hasbecome a genuine holiday destination—the third most popularwith UK travelers—and a global venue for blue chip sportingevents that attracts the biggest names and fattest purses onthe planet.

It proves that a lot can be achieved by micro-managing themacro-economy if there is a strong ruling class with avision.

One wonders what Adam Smith might say to such a plan.

May 1, 2007 0 comments

Comment

Flashes in the neo-con pan!

by Peter Speetjens May 1, 2007

written by Peter Speetjens

Muslims living in Holland should tear the Koran in half, as half of the book advocates violence, thus maverick Dutch politician Geert Wilders recently suggested, subtly adding:“If Mohammed lived here today, I could imagine chasing him out of the country tarred and feathered as an extremist.”

This was the latest in what has become an extensive repertoire of Wilders’ “wisdom” on immigration and Islam. He has also held forth on headscarves and mosque building, and it is this populist and provocative approach that has brought him headlines as well as friends and foes in equal measure. His nicknames include: bulldog, crusader, street fighter and, on account of his carefully waxed LouisXIV white locks, the Blond Dolly of The Hague.

Having left the liberal party in 2004, which he thought“too left,” Wilders went on to establish his Freedom Party, with which he won 9 out of 150 parliamentary seats during the 2006 elections; and according to a recent poll, Wilders would win seats, if elections were held today.

Latest in a series of political grandstanders

However, one would gravely underestimate current trends inHolland by writing off Wilders as a noisy crank, thrown out by the exotic tradition of Dutch coalition-based politics.Wilders is but the latest in a series of very colorful, if highly controversial politicians, who have played the anti-immigration card for significant political gains and triggered a wind of change, transforming the Dutch Kingdom from one of Europe’s most progressive and welcoming states into a country with the toughest immigration laws on the continent.

It all started at the end of the 1990s with the emergence of the flamboyant Pim Fortuyn, a former communist turned liberal university professor with a love for designer suits and controversy. Warning of “an Islamization of Dutch culture,” even though Muslims make up but 5% of the population, Fortuyn was the first to put immigration and integration firmly on the political agenda. He was shot dead in May 2002 by a Dutch environmentalist.

Next to carry the anti-immigration and anti-Islam flag was Ayaan Hirsi Ali, a Somali refugee who was granted political asylum in 1997 and who entered parliament for the LiberalParty in 2002, under a storm of criticism, as she had always been a member of the Labor Party. Ali was and still is a very ambitious woman and, like Fortuyn, emphasized the“backwardness” of Islam, especially regarding women.

Loyal to her new liberal party masters, Ali also called for tough immigration laws, until in May 2006 it was discovered that the 37-year-old had lied about her past. She had not lived through and survived the Somali civil war, but in fact attended one of the best schools in Kenya. Too much of a political hot potato for her party, Ali withdrew quietly from mainstream politics and accepted a job with the ultra-right American Enterprise Institute.

With Fortuyn killed and Hirsi Ali gone, only Wilders remains. Often called “the new Fortuyn”—a title he vehemently rejects—Wilders wants to be seen as` his own man.“I want people to judge me on who I am,” he stated during a visit to the United States. “I am Geert Wilders. What we share is our anger that the popular voice is not being translated into policy.”

The last sentence says it all. Like Fortuyn before him,Wilders claims that Dutch politicians have lost touch with“the street.” To back up his often outrageous comments,Wilders likes to refer to “the millions outside(parliament)” who think like him. Fortuyn claims he dared to say what “most people” only dare to think. Such populist references to “the silent majority” have had often disastrous consequences in the past. At the height of its popularity in 2003, Fortuyn’s party took only 17% of Dutch seats, while Wilders could only claim 6% in 2006.

The purpose of Wilders’ trip to the United States was to meet a number of neo-con and Christian right groups. “I want to explain what’s going to happen in Holland and ask for support—political support, maybe financial support, all the support possible.” Wilders is in dire need of support, mostly monetary, as he is no longer part of the well-offLiberal Party, and has become painfully aware of the fact that a political party cannot live on screaming headlines a lone. Yet, although the new breed of Dutch politicians can rely on some sympathy among America’s conservative elite, it is unlikely they are to receive much cash.

First of all, institutions linked to the US government will think twice before financing a Dutch opposition party, while Holland belongs to America’s most loyal allies in the so-called War on Terror. Secondly, conservative Holland is not quite yet conservative America. Wilders may be anti-Islam and cherish a free market ideology, yet he lives in a country that has formally embraced gay marriages, abortion, euthanasia and a liberal drugs policy.

What does this mean for the future of Wilders? Well, on the short term, he will no doubt continue to provoke headlines.Yet on the long term, a combination of limited finances and equally limited political experience will see the FreedomParty follow in the footsteps of Pim Fortuyn’s party, which failed to win a single seat in the 2006 elections.

PETER SPEETJENS is a Dutch writer and freelance consaltant

May 1, 2007 0 comments

Lebanon

French shipping firm with Lebanese roots boosts Beirut’s port activity

by Executive Staff May 1, 2007

written by Executive Staff

The rise of Beirut Port with strong growth of freight volumeand earnings since late 2004 is partly due to the Frenchshipping firm with Lebanese roots, CMA CGM. With claims tobe the world’s third-largest container shipping line sinceacquiring Delmas—another French shipping line with strongAfrican business—in 2006, CMA CGM has demonstrated a visionfor its Beirut location that includes on the one hand aproject to construct a new office building and on the otherhand involves the group’s reliance on Beirut as a port ofcall and transshipment hub.

However, the company’s two recent activities—finalizing athree-year contract with the Beirut Port Authority at thestart of 2007 and laying the cornerstone for the newregional operations building with capacity for 400 employeesat the port’s free zone in April—are in no way interlaced,insists the general manager for CMA CGM (Compagnie Maritimed’Affrètement-Compagnie Générale Maritime) in Beirut,Georges Kurban who told Executive that it is “wrong” to askabout the two issues in one question.

Building in Beirut

In the core of the matter, the company’s decision to buildits own offices in Beirut is the older of the two moves andrelated to its global strategy. “The project has beendecided long time ago because this is our homeland, wherethe roots and origins of CMA CGM are. This step is withinthe process of the image of the company to have offices invarious parts of the world,” Kurban said.

Other office development projects of the firm include a newoperations center in Marseilles and a regional office inAlgiers, as well as a building in the American seaportVirginia Beach. While the international center of CMA CGMactivities will expand in Marseilles, the Beirut premiseswill also house Merit Corporation, the holding companythrough which CMA CGM’s Lebanese founder and presidentJacques Saade and his family control the shipping firm andseveral smaller sister companies involved in freightforwarding, overland transport, real estate ownership, andtrade in office supplies.

Active for decades

The company has been active in Beirut for decades, Kurbansaid, serving clients in Lebanon and the hinterland. Itexpanded its activities significantly in recent yearsthrough adding the port to its weekly shipping service onthe route that originates in the industrial ports ofnorthern China and Indonesia’s Port Kelang and offersservice to Jeddah, the Mediterranean, and Northern Europe,and last November on the reverse route from Europe to theFar East that also facilitates shipments from Beirut toJeddah and other Red Sea ports.

The weekly stops which CMA CGM secured through its newcontract with the Beirut Port Authority brought business andjobs to the port. When total container movements at the portin January and February increased by 70% from the sameperiod a year ago to over 154,000 twenty-foot-equivalentunits (TEU), transshipment activities by CMA CGM and itslarger rival MSC, which also transships at Beirut, can beexpected to have contributed significantly to the strongrise in traffic, on top of increases in Lebanon’s nationalexports and imports that have given some hopeful indicationsfrom the start of this year.

Kurban did not specify the number of containers which CMAvessels has loaded and unloaded in Beirut per month sincethe company started calling on the port on both legs of itsnorth China route but he confirmed that volumes coming fromChina are generally larger than the volumes traveling theother way.

The importance of the contract that secures CMA CGM’susage of the Beirut Port container terminal at Quay 16clearly lies in the fact that it brings transshipmentbusiness. Attracting major shipping lines to make Beirut ahub for regional traffic was one of the main objectivesbehind the expansion and rehabilitation of Beirut Port thatstarted in the 1990s and resulted in an operationalcontainer terminal with the installation of modern gantrycranes about three years ago.

On the strength of these cranes, which can transfercontainers between CMA CGM’s 6,500 TEUs carrying mothervessels and four (on average) smaller feeder vessels perweekly visit, the company serves its clients in easternMediterranean ports between Mersin in Anatolia and Damiettain Egypt from Beirut. In total, the hub operation coversseven ports in Turkey, Syria, Cyprus, and Egypt.

Beirut’s evolution into a successful transshipment centershows how much the port could achieve after years ofinfighting and various obstacles to its start of containeroperations were removed. It also proved skeptics—which in the past few years have included members of theshipping industry and the port administration—wrong in theirassumption that cargo increases at the port would mainly bedriven by terminating trade and not by transshipment trafficto other destinations.

Beirut’s ‘gift of nature’

For Kurban, the reason why Beirut could win the businessof major shipping lines is a mixture of the liftingcapacities, trained operators, and what he called a “gift ofnature”. “In comparison with other ports in the region,Beirut has new terminal and services that other ports cannotoffer. It also has a natural advantage in the water depth atthe quay that other ports cannot provide,” he said.

However, Kurban added that the gantry cranes of Beirutwith their 60-ton lifting capacity could soon enough beensurpassed by regional deployment of cranes with 100-toncapacity that can move containers at higher speed. Dependingon cargo flows and the services they offer, other nearbyports thus could in future successfully angle for becomingregional hubs.

He sees the future of shipping on global scale influencedpositively not only by China but also by the development ofcountries such as India and Vietnam or Latin Americancountries which claim greater manufacturing roles. “Theshipping industry from 20 years ago is totally differentfrom the shipping industry today, because of the developmentof the countries and the development of bigger and fasterships that offer better revenues and lower costs,” he said.He expects good development of the shipping and freightforwarding industry to continue further “but I believe noone can give you a date” on how long the industry will boomas it did in recent years.

With about 1% of the company’s global work force basedhere, Beirut cannot be expected to be an overpoweringrevenue factor in the books of CMA CGM. The company,according to its results presentation for last year fromMarch 2007, achieved a worldwide turnover of $8.4 billion ona shipping volume of 5.9 million TEUs, representingincreases of 33% and 28% respectively, as the groupintegrated the Delmas company from January 1, 2006. Netprofits last year increased by 5% to $611 million.

Growth strategies of CMA CGM include more acquisitionsworldwide, a near-term increase of its fleet to over 300vessels (on the back of accomplishing a 50% increase in itsfleet size to 286 vessels at the end of last year), andopening of new routes. In North Africa, the group has boldplans for Algeria, including financial services and railservices. In the Middle East, Iraq is a country where Kurbansees a strong role for CMA CGM as soon as the situationimproves, based on the company’s long presence andexperience in the area.

Kurban, on whose desk sat a brochure on an expansionproject of Lattakia Port at time of his interview withExecutive, said that the company’s growth plans for theEastern Mediterranean include operations in Syria andbidding for port projects there and wherever attractivecontracts are being offered. CMA CGM, which manages Maltaport under an exclusive agreement and has operatoragreements in 15 ports overall, had been a bidder for thecontainer terminal operator contract at Beirut Port but didnot win the deal.

In this age when the position of Beirut is that of a portcompeting with several others for a regional role in theEastern Mediterranean and the idea of ever seeing a sizeablecommercial fleet of Lebanese-flagged ships is remote, thefamily-run CMA CGM group built by entrepreneur Jacques Saadeinto a modern-day shipping firm with 11,500 employees (andan active global employer of Lebanese) is the closest thingto a Phoenician maritime trader empire which one can find inthe early 21st century.

May 1, 2007 0 comments

Banking & Finance

Bonds… Corporate Bonds – Debt trading comes on strong in region

by Executive Staff May 1, 2007

written by Executive Staff

The growth of bond issuance in Arab markets, includingconventional and Islamic paper, has taken off in 2006-2007.Figures circulated by the financial industry say that bondissuance by GCC corporations reached $18.2 billion in 2006,compared with less than $2 billion in 2003. In total, GCCbond issuance surpassed $40 billion last year, comprisingsovereign, banking, project finance and corporate issues aswell as shariah-compliant issues.

The increase of 2006 was exceptional because numbers wereinflated by some very large issues from the UAE, namely aconventional bond by Abu Dhabi energy company Taqa worth$3.5 billion and by two similar-sized shariah-compliantissues from real estate developers Nakheel and from Dubai’sPorts, Customs, and Free Zone Corporation (PCFC), PhilippLotter, a senior credit officer of international ratingsagency Moody’s Investor Services, told Executive.
Lotter authored a study that forecasts 2007 to be anotherextraordinary growth year, with issuance of corporate bondsin the GCC to at least double by end of December and withoutrunning out of steam. Even issues much smaller than theheadline-making multi-billion-dollar bonds “faced strongdemand,” he said, and there is no danger yet that smallerissues will be crowded out.

Bond experts from the banking industry also see the MiddleEast just at the start of an epochal journey to develop theprimary and secondary markets for tradable fixed-incomesecurities. Coming from a minuscule base, “the market hasdeveloped very well. We foresee healthy growth for bonds andsukuk in 2007 and beyond,” said Tim Harrison, associatedirector of HSBC Bank Middle East for corporate andinvestment banking.

Corporates and government-backed companies last year werenot the region’s only forces with a mind to issue morebonds. According to Lotter, bond issuance in the GCC in 2006originated to $13 billion from banks and to $9 billion fromgovernments. Project finance for $3.5 billion pushed thetotal to $40.3 billion. Corporate issues were split 60-40between conventional bonds and sukuk.

The volume of fixed-income securities in the Middle East hasexpanded across all type of products, affirmed Adel Afiouni,a managing director with Credit Suisse based in London.Conventional and Islamic, debt, asset backed orequity-linked, etc. has increased substantially over thelast years and there is clearly room for much more growth,added Afiouni who heads CS’s Middle East & North AfricaInvestment Banking Coverage.

The bond market’s spell… You are getting verysleepy

What creates the spell of the bond market? Bond varietiesare much more numerous than spy movies but on average alsomore boring. An Aston Martin is not required, and neither isa Martini, but small is the band of people with fascinationand license to deliberate on semi-annual coupons, redemptionvalue, floating rates, puttability, and the inverse relationof price and yield.

The fixed-income market is also the domain of specialists.While individuals do buy bonds and US households have beensaid to hold about 10% of US bonds in circulation, theretail investor mostly interacts indirectly with the bondmarket—either through owning stakes in bond-investing funds,or as beneficiary of pensions and returns from otherinstitutions which rely heavily on sovereign bonds orcorporate issues.

But for companies as issuers and institutional investorsas buyers, the fixed-income market is a sexy propositionbecause it is a merry match to equity for serving fundingneeds, to such an extent that bonds today are amulti-trillion dollar market which makes the current size ofArab bond business look like an orientation course.

However, the exponential growth has been quite recent whentaken in the historic context of bond issuance which hasbeen closely aligned with the rise of the financial industryfor some four centuries.

Initially, the lenders of post-medieval Europe conceivedof bonds to meet the large funding needs of rulers and thosenoble families whose nobility referred to running upexpenses in chronic excess of their income.

Bonds helped the early bankers to source funding that theycould not provide on their own and distribute risk inserving such customers. The idea also caught on for warfare,the real money-burner of all ages. European countries andlater on the United States issued war bonds to cover theimmense cost burden of the World Wars. Depending on thesuccess and righteousness of the conflicts, war bonds werethe—by all means risky—mixture of patriotism andprofiteering that could generate excessive gains for somebut usually meant sacrifice for many, or ruin after lostwars.

Trains push developing bond market

Another great source feeding the evolution of bonds wasinfrastructure finance, especially railroad bonds, whichwere the rage in the 19th century rail transport revolutionfrom economizing Czarist Russia over train spotting Britainto freewheeling North America. In an age of wild expansionand no supervision, the surge of railroad bonds offered theunintended side-effect of giving fraudsters handyinstruments for duping gullible buyers with worthless fakes.

The transport industry debt instruments thus contributedprominently to the emergence of the credit ratings industry,which started out with small providers of information ondebt instruments such as railroad bonds to investors at thebeginning of the 20th century. But it wasn’t until theproliferation of debt markets and bond issues from the 1970sthat ratings agencies started booming and fee-based ratingof corporations and debt issuers became a phenomenal growthbusiness.

US corporations were the first to delve into bonds asalternatives to equity and bank debt, followed in the 1990sby European companies. Researchers say that issuance ofcommercial paper alone increased almost threefold in the USin the last 10 years of the 20th century, supporting annualrevenue growth rates of 15% for the leading ratings agency,Moody’s. Europe’s corporate bond market benefited from theMaastricht treaty and euro introduction and more thandoubled between 1995 and 2000.

The growth was accompanied by introduction of newregulatory and ratings mechanisms. But risk shocks have notentirely vanished in corporate issuance, even when theissuer is not an unrated entity or producer of a junk bond.An example for a bad risk that caught the US market offguard was the case of telecommunications firm WorldCom fiveyears ago.

Investors in bonds by WorldCom—which had made the recordbooks with an $11.9 billion corporate bond issue rated byagencies as investment-grade just a year before itsdevastating fraud and financial scandal in 2002—lost abouttwo thirds of their money when the company went belly up.The partial recovery of investments meant that bond holderswere still better off than other WorldCom stakeholders butthe case reverberated in the courts.

In the Middle East, bonds are coming into big play a good30 years later than their rise in the US and about 15 yearslater than in Europe. But this does not mean that the bondidea is past its prime. Given the relative saturation of theUS bond market, indicators suggest that the Middle East candraw a lot of attention to its bond issues, bothconventional bonds and their Islamic equivalent, sukuk.

Benefiting from a ‘virtuous circle’

The bond market in the Middle East is benefiting from a“virtuous circle of increased issuance by regional borrowersand increased interest from international investors,” saidAfiouni. He told Executive that the increase in the volumeof new corporate bonds over the last years is the result ofissuers realizing that they can benefit from globalliquidity to diversify their source of funding away fromtraditional local banks lending and tap into a new investorbase. International bond buyers in turn are attracted by thefact that Middle Eastern bonds provide diversification andstill offer some premium and an attractive risk returnprofile over comparably rated bonds from issuers in otherdeveloped markets.

In April, the growing role of regional bond finance wasfurther illustrated by news that Saudi billionaire Maan AlSanea (a Saudi Arabian financier who won global attentionthis year by being included for the first time in the Forbesbillionaires list) intends to finance acquisitions andexpansion measures of the Saad group by issuing conventionaland Islamic bonds worth about $5 billion. The news came onthe heels of an announcement that Sanea bought a $6.6billion stake in HSBC.
Given that integration of financial markets andliberalization/deregulation measures are among the mainelements that stimulate the growth of the financialindustry, Arab bond markets are likely to get further boostsfrom convergence measures, including the planned monetaryunion.

Euro gains currency as bond instrument

In this context, European central bankers have pointed outthat the euro has gained in importance as bond issuingcurrency through the European Monetary Union, which moreoverhas boosted intra-eurozone trade volumes by around 10%without hurting external trade. This raises the question howstrongly the GCC joint currency project will influence thegrowth of trade and financial markets in the region—if itsucceeds as planned—and how much this will enhance the bondscene.

However, the majority of current GCC bond issuers addressinternational markets, said Harrison, implying that theimpact of regional economic integration will be less of afactor for the Middle East bond market boost.

“In the Dubai ports issue, 95% of investors came fromoutside,” he said, adding that the majority of currentissues, including Islamic ones, are denominated in dollar,because that makes them much more appealing to internationalbuyers.
Elements of the overall bond issuance picture incurrencies and formats that appeal internationally are alsothe Euro Medium-Term Note Programs (EMTN), debt instrumentswhich several regional banks have deployed successfully inthe past two years.

The market shows trends of broadening into local and otheremerging markets currencies, though. Last month, EmiratesBank Group closed its first bond denominated in the ThaiBaht, a $61.5 million issue that was lead-managed byStandard Chartered Bank, the same bank that had arranged GCCbond issues targeting other Asian markets by beingdenominated in Singapore and Hong Kong dollars.

Local investor hunger

In an example for companies responding to local investorhunger, Kuwait’s Global Investment House in late Aprilclosed a KWD45 million ($156 million) bond issue withfive-year maturity in two tranches, one paying 7% annualinterest and one with a floating rate. It is the financialfirm’s second bond and will be used to repay other debt andfinance investments.

Global’s senior vice president for marketable securities,Saidu Mohammed, told Executive that the investment bankdecided to issue the bond, which it also manages, todiversify and extend maturity of its financing tools, whichinclude funds and Islamic instruments.

It is not necessarily cheaper for companies to issue bondsthan obtaining bank loans, said Lotter, but by accessing thebond market firms can diversify their funding base and theirinvestor base. As a lesser motive, corporations also maywant to reap some benefits from the publicity associatedwith launching a massive bond and spreading the news of itsrating in the global financial industry.

Sukuk are bound to claim a greater role in regional fixedincome and are expected to penetrate global markets. Thatinfrastructure development is one major reason for theincrease in sukuk issuance creates a certain parallel in thegrowth of the asset-backed Islamic financial instruments tothe historic emergence of bonds in the debt markets ofEurope and North America. The plans of the UK and Japan, andalso of Germany, to issue new sovereign or government-backedsukuk will make sukuk again more palatable to investors.
To behave like bonds elsewhere, the Islamic andconventional issues need a liquid secondary market wheretrading of bonds stimulates further financial flows. Mostexperts agree that the region’s secondary bond markets arestill some time away, with the Dubai International FinancialExchange—where more sukuk are listed than anywhere else—andthe London Stock Exchange—which recently announced theestablishment of a secondary market for sukuk—being ahead ofothers in the attempt to grab the trading action.

Nakheel listed its sukuk on DIFX and LSE, and DubaiIslamic Bank has the same agenda for its new musharakasukuk. But trading in securities on DIFX is still somewhattheoretical and other contenders are in the race for hostingthe secondary market in Middle Eastern bonds. Thesecontenders include Bahrain and Kuala Lumpur, both placeswhere Islamic finance is strong.

Given the recentness of bond issuance in the GCC, theexperts would not estimate the timeframe for building aliquid secondary market. “It will take several years,”Lotter estimated. Afiouni noted that the investment behaviorof banks and other bond buyers in the Middle East was, untilrecently, still predominantly characterized by abuy-and-hold mentality. “They put them into the drawer untilmaturity,” he said, “but we expect this to change asinternational investors become more actively involved.”

In Kuwait, bond buyers are still holding to maturity,Mohammed said. While he expects the market to grow into moreissues, he sees the emergence of a secondary market for themoment as a wishful proposition. The market is “not thatliquid. If we want to see a liquid bond market, we will haveto be patient,” he said.

Harrison, however, claimed that a secondary market forover-the-counter trading of Middle Eastern bonds is alreadytaking off in Dubai. “It is starting already,” he said,referring to an active trading desk at HSBC.

With the latest announcements of bond projects, trends for2007 indicate that corporate issuance could well increasebeyond $40 billion this year and peak in a wave of growththat will continue at high rates well into the next decade.Besides the implications for development of a secondarymarket, the booming bonds imply that need for ratings andauxiliary services will increase in the next few years.Information on issuers, overall market conditions, anddetailed fixed-income trends and daily news will be a strongbusiness opportunity.

May 1, 2007 0 comments