EGPC to issue first oil export notes (Trade Finance)

Egyptian General Petroleum Corporation (EGPC) is to issue $1.55 billion of export-backed notes in the first export future flow deal to come out of Egypt and the company's first capital markets transaction.

Standard & Poor's has assigned preliminary ratings to the A class notes to be issued by Petroleum Export Limited, a special purpose vehicle. The class A-1 and A-2 notes are wrapped and each received AAA ratings. Insurance for the $500 million A-1 notes is provided by MBIA, while XL Capital is covering the $250 million A-2 tranche. The $800 million A-3 notes are rated BBB.

Petroleum Export will purchase oil and naphtha from EGPC on a forward sales contract and sell to Morgan Stanley Capital Group, which acts as offtaker on the deal. Morgan Stanley is global coordinator, while BNP Paribas and Merrill Lynch are also understood to be joint bookrunners. National Bank of Egypt and Banque Misr are reportedly co-managers.

Until now, EGPC has relied on inexpensive short-term, commodity-backed loans, most recently completing a $100 million syndicated pre-export financing in 2004. Trade bankers say that legal constraints on the pledge of receivables have in the past prevented lending above a one-year term but this does not appear to affect the export notes: the

class A-1 and A-3 notes mature in six years, while the class A-2

notes are expected to be due in June 2010.

Libya: Banking liberalization stepped up (MENAS Associate / Zawya.com)

MENAS associates (Libya Focus) reports that reformers in Libya have upper hand, at least for the time being, as judged by the recent development in the Banking sector. Nevertheless, the reformers, and espcially Prime Minister Ghanem, face constant challenges by senior figures within the Revolutionary Committees.

Calming the market (MEED, Zawya, Gulf News)

Middle East Economic Digest (MEED) reported that GCC markets and in particular UAE & Saudi will suffer from downward pressure due to the large number of upcoming IPOs that will sap the current high liquidity & valuation of these market. In addition, MEED reported current criticism of regulation (especially in UAE) where IPO's are only allowed to issue shares at par and to list a minimum of 55%. This prohibit established companies from listing. MEED quote one Investment Banker that urges the Government to regulate the market but not to interfere in pricing of new issues. Pricing should be arrived by book building exercise. Whilst the CMA, financial regulator of Saudi Arabia, is less interfering in regard to pricing and banks have ability to arrive at price through book building, the regulation remains opaque and convoluted as judged by recent IPO of Maarai.

Zawya & Gulf News - re-enforce same view as MEED. Fund Managers see downward pressure on the markets in the coming months as Dh 40 billion of new issues as well as rights issues coming to market, choking liquidity.

Finally, AMEinfo reports that DFM (Dubai Financial Market) are down by 32% and shares on the ADSM (Abu Dhabi Financial Market) by 24% from their peak.

Telecom Tower in Iraq 

WSJ.com - Iraq's Cellphone Battle

Good article from WSJ about the experience of a particular company, Iarqna – part of Orascom Telecom, in operating in Iraq. Iraqna was established in 2003 to serve the central region of Iraq and has brought in US$180 million, largest invest to date in Iraq.
The company has been plagued by insurgents attacks, theft, kidnapping of employees, Jamming by US forces, complaints by its customers and competition from Atheer (Operator in South which counts Vodafone as one of its partners).
Iraqna has 1.1 million subscribers, up from 537,000 at the end of 2004 -- the increase came after the company expanded in Iraq's southern region. By end of 2005, the three current mobile telecom license in Iraq will be put up for tendering. (see blog).

Dubai - Telecoms: The difficulty with liberalisation (FT - Zawya.com)

TECOM (parent of Dubai Internet City) is growing from serving pockets of areas in Dubai to perhaps one day bidding for the second telecom license in the UAE. The telecom provider currently serve telecom, data, Internet connectivity to host of zones in Dubai as well as Emaar properties (Villas, Flats). With the creation of the Telecommunications Regulatory Authority (TRA), the sole regulator of the telecom market in the UAE, Etisalat will have to face up to competition, eventually. With its 70% margin (one of the highest in the GCC), and high penetration it will form a formidable force to be reckoned with. Data & Internet connectivity being its weak points.
Due to political sensitivity, liberalization will take a long time nevertheless TRA may be prompted to allow Voice over IP (VoIP) which will benefit TECOM.

Will Storage Bloat Finally Bring Energy-Price Bust? (Barrons)

Following previsous blog oil theme, this is another good article from Barron's that shed some light into high oil prices.
Investories of oil & gas are at all time high (or what historically be termed as a glut). Nevertheless, the measure of oil & gas inventories which usually gives direction to the trajectories of oil prices seem to have broken down according to analysts. In the past, there was a clear correlation between days of forward-demand cover represented by OECD commercial-oil inventories and changes in prices, an analyst from SG reported. This model, he added, does not work any longer. This is because the margin of error is very small now (any incident affect prices more severely) espcially as the safty valve (OPEC) is pumping at max and refining capacity is stretched thin.
But with prices sky high and with the sharply upward-sloping term structure in futures contracts providing a strong financial incentive to store both oil and gas, there's the possibility that energy companies may overdo their stockpiling, setting the stage for a price crash -- especially if high prices eventually choke off demand. "The futures market is going to make the physical market prove it first," says Schick. "It's logical that the market's headed in a pretty bearish direction."

G8 ups heat on oil states as energy prices soar (Reuters)

G8 increase pressure on oil producing countries to increase production and ease off high oil price. Comments : Consuming countries seem to miss a large factor in the increase of oil prices and that is the under-investment, in particular in the USA, in refining capacity. There has not been a single new refinary in USA for over 25 years. Majority of producing countries are or close to their maximum production.

Pepsi seeks to rebuild as ‘cola war' looms (FT)

With Coke re-entry into Iraqi market after a 37 year absence, the two Cola giants square on for a competitive cola war. Good article from the FT which demonstrates that business and entrepreneurial spirit is alive and well in Iraq despite the security situation.

Telecom Italia investment in Turk Telecom to rise after bid battle (Forbes)

The battle for Turk Telecom became a two horse race between Saudi Oger and Etisalat. But the winner with $ 6.55 billion is Saudi Oger consortium which include Telecom Italia. Telecom Italia has now through cross shareholding via TT & TIM (mobile telecom operator) has effectively increased its overall shareholding in Turk Telecom and stabilised its position in Turkey without taking on additional debt.