Islamic Bonds Are Booming (WSJ.com - subscription)

Global Issuance Has Surged As Nations Outside Mideast Ease Use of the Instruments

The economic boom in the Middle East has been accompanied by a surge of international interest in a relatively new form of debt: Islamic bonds that act a lot like regular bonds but comply with the financial rules of Shariah law.

Global issuance of these bonds, known as sukuk, reached a total of $6.7 billion (€5.33 billion) last year, up more than fourfold from 2003. This year, issuance is expected to rise again, with an estimated total of $5.7 billion issued so far, according to the Bahrain Monetary Agency and others.

The structure of Islamic bonds is similar to that of conventional bonds: They have coupons, maturity dates and yield. The difference is in the underlying foundation on which the bond is based. In Islam, charging interest is prohibited, so sukuk must have a transaction -- such as a sale, a rental, or a sale and leaseback agreement -- that underlies them.

Egypt Country Analysis by the EIA

Egypt recovery from the 2001-2002 economic crisis has been remarkable to say the least. Egypt is quickly becoming a significant LNG producer by securing markets in the Med. Good report by EIA.

Lebanese polls signal big role for Hariri’s son

As predicted, the son of Rafiq Hariri sweep seats in first round of elections. Nevertheless, the turnout is low amid voter dissatisfaction. This only indicates weak mandate for the elected party.

Moody's: Three Qatari banks on review for possible rating upgrade

Moody's placed on review for possible upgrade the A3/Prime-2 foreign currency deposit ratings for three Qatari banks :Commercial Bank of Qatar, Doha Bank and Qatar National Bank. Rating action follows Moody's recent upgrade of Qatar's foreign currency country ceiling for bonds and bank deposits to A1/Prime-1 from A3/Prime-2.

Saad Hariri 

Saad Hariri: victory in the bag

Polls will be the first in three decades without the presence of Syrian troops
BEIRUT: Saad Hariri, son of slain former Prime Minister Rafik Hariri, is expected to record an overwhelming victory in the first polls in Lebanon in three decades to take place without the presence of Syrian troops.

Consolidation of the Egyptian Banking Sector : AAIB Buys Stake in MIAB

The Consolidation of the Egyptian Banking sector continues with another deal. Arab African International Bank buying stake in Misr International American Bank. These moves confirm the positive steps taken by the Governor of the Central Bank to strengthen the Egyptian Banking sector by increasing the minimum regulatory capital requirments for Banks in Egypts.

Enel Agrees to Sell Wind to Sawiris, Take Indirect Stake in Orascom

By DAVID PRINGLE and JASON SINGER
Staff Reporters of THE WALL STREET JOURNAL
May 27, 2005; Page B3

Italy's Enel SpA Thursday said it will take an indirect stake in Orascom Telecom Holding SAE, which is listed in Cairo and London, as part of a deal to sell the Italian power giant's Wind telecommunications unit to Naguib Sawiris, the billionaire who controls Orascom.

Under the deal, Enel will to take a 26% stake in a new holding company that will own Wind and 50% plus one share of Orascom Telecom. Weather Investments, a group headed by Mr. Sawiris, will own the other 74% stake in the holding company.

Enel will receive �3 billion ($3.8 billion) in cash from Weather and remove �7 billion of Wind's debt from its balance sheet under the deal. Enel said its 26% stake in the holding company is valued at �1.96 billion.

If completed, the deal delivers on a promise by Paolo Scaroni, chief executive of Enel, to unload Wind before he leaves to become chairman of oil giant ENI SpA later this week.

Enel, which wants to concentrate on its power business, said in April that it had entered into exclusive negotiations with Weather for the sale of Wind, but the structure of the announced deal is a surprise because people close to Mr. Sawiris had indicated that Wind and Orascom Telecom would remain entirely separate for the time being.

Under the new arrangement, Wind and Orascom may be able to exchange ideas, products and services through the new holding company and generate some synergies.

Through Orascom and Wind, Mr. Sawiris will have interests in telephone companies in Asia, Africa, the Middle East and Europe.

Orascom has stakes in telephone companies spanning nine countries, with more than 14 million customers. Wind, with a net loss of �363 million on revenue of �4.71 billion last year, has more than 12 million cellphone customers and 2.3 million fixed-line customers in Italy.

WSJ : Comments from Breakingviews : Sale of Unit to Egyptians Leaves Italian Company With Mobile-Telecom Stake

Enel's Wind Deal May Not Solve All of Its Problems

Enel SpA has finally figured out a way to get Wind off its books. The Italian utility has agreed to form a joint venture with Egypt's Orascom Telecom Holding SAE that supposedly values the mobile-telecom operator at �12 billion ($15 billion). The deal achieves its main purpose of allowing Enel to deconsolidate Wind's �7 billion of debt. And that makes the utility more attractive ahead of a planned public sale of a large chunk of its shares. But the transaction hardly solves Enel's Wind problems once and for all. (See related article.)

When everything is finished by next summer, Enel will have received �3 billion and wriggled off the hook for Wind's debts. It will also hold a 26% stake in a joint venture called Weather Investments, which will own all of Wind and 50% of Orascom. Enel claims its Weather stake is worth around �2 billion. Add everything up, and you end up with Wind's �12 billion figure.

But there's more than one fly in the ointment.

For one, the deal leaves Enel with a continuing stake in a mobile-telecom company. Moreover, Orascom is a relatively weak partner. Indeed, it isn't certain that the Egyptians could have financed the deal without mortgaging half their company into Weather -- or else pledging shares in some way.

Furthermore, in coming up with its estimated value for Weather, Enel has attached a premium over the combined value of Wind and Orascom to account for supposed synergies between the operations. Given the limited overlap between the businesses, however, this premium looks optimistic. Without it, Enel's stake in Weather is worth about �500 million less, or only �1.5 billion.

Finally, there's the question of what happens when Enel wants to dump its stake in Weather. Enel has already said it is angling for an initial public offering of the group. But given that Weather looks like an unwieldy collection of Italian and North African telecoms assets, the stock market might value it at a discount.