North Africa/Middle East

Bahrain said Wednesday its Gulf neighbors Kuwait, Saudi Arabia and the United Arab Emirates will offer new aid to strengthen the island nation's "fiscal stability" amid growing concerns over its economy, the International New York Times reported on an Associated Press story. Bahrain, just off the coast of Saudi Arabia, long has relied on the largess of its wealthy neighbors to support it despite being the first Arab nation in the Persian Gulf to strike oil.

Authorities in the United Arab Emirates have issued arrest warrants for the founder of private equity firm Abraaj and another executive for issuing a check without sufficient funds, according to a prosecution document seen by Reuters. The warrants are the latest setback for the Middle East and Africa’s biggest private equity fund, which has been locked in a dispute with four investors over the use of their money in a $1 billion healthcare fund, Reuters reported. Abraaj has denied misusing funds.

The absence of any signal of financial aid from Bahrain’s neighbors sent the kingdom’s credit risk rising the most in emerging markets this month, Bloomberg News reported. The cost of insuring Bahrain’s debt against default for five years jumped 170 basis points on Monday, the most since records began in 2008, to 609. That’s the highest among emerging-market peers after Lebanon. The dinar, whose peg to the dollar has been effectively unchanged since 1980, fell a fourth day in the onshore market to the weakest level since at least 1988.

The co-chief executives of Abraaj Investment Management Ltd (AIML) are stepping down from the board of the unit, days after the Dubai-based firm agreed to sell the bulk of the business to Colony Capital, Reuters reported. This is the latest shakeup at Abraaj, the Middle East and Africa’s largest private equity firm, which has been bruised by a dispute with some of its investors over the use of their money in a $1 billion healthcare fund. The group has denied it misused the funds.

Saudi shares rose at the open on Thursday, while Dubai-listed Air Arabia tumbled after the carrier revealed it had an exposure of $336 million to embattled Dubai private equity firm Abraaj, Reuters reported. The Tadawul All-Share Index was up 0.3 percent, led by financial shares, after the kingdom’s bourse was granted inclusion by MSCI into the index provider’s emerging markets benchmark. Al Rajhi Bank and the country’s largest lender National Commercial Bank were both up one percent.

Dubai-based Abraaj Group agreed to sell its Latin America, Sub Saharan Africa, North Africa and Turkey Funds management business to U.S. investment management firm Colony Capital Inc, the companies said on Thursday. The agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp (IFC), over the use of their money in a $1 billion healthcare fund, the International New York Times reported on a Reuters story. The group has denied it misused the funds.

In a related story, Reuters reported that an Abu Dhabi Financial Group company has made a conditional $50 million offer to buy private equity firm Abraaj’s investment management business, a document reviewed by Reuters shows. Abu Dhabi Capital Management’s (ADCM) bid is well below the $125 million offered by New York-based Cerberus Capital Management before Dubai-based Abraaj filed for provisional liquidation in the Cayman Islands last week, Reuters reported. It was unclear whether the terms of the offer that Cerberus made were different from the one made by ADCM.

Abraaj said a Cayman Court appointed provisional liquidators, allowing the troubled private equity group to launch a court-supervised restructuring plan, the Financial Times reported. The Dubai-based firm in a statement on Tuesday said a court order on Monday appointed executives from PwC as joint provisional liquidators of Abraaj Holdings and executives from Deloitte for the same role at the asset management arm, Abraaj Investment Management Limited, or Aiml.

The cost of insuring Bahrain’s sovereign debt against default is at an historical high, amid continuing concerns over the country’s ability to tap international markets to stave off a potential financial crisis, Reuters reported. Bahrain’s credit default swaps went up to 413 basis points last week, surpassing previous peaks of 412 basis points in February 2016, when oil prices were at around $30 per barrel, and a peak of around 400 basis points in early 2012, in the aftermath of the political uprising of the previous year.

Dubai-listed Air Arabia said on Monday it has an investment in Abraaj funds, without elaborating further on its exposure to the private equity group which last week filed an application for provisional liquidation, Reuters reported. Abraaj’s founder Arif Naqvi is a board director of the Middle East low-cost carrier, according to Air Arabia’s website.