North Africa/Middle East

Bahrain-based Arcapita Bank, the first Gulf company to file for bankruptcy in the United States under Chapter 11 rules, said on Saturday it had submitted a plan to reorganise the company, Reuters reported. The investment firm filed for bankruptcy in New York in March and was given court approval in November to take out a $125 million sharia-compliant loan to provide funding while it restructured its debts. Arcapita's case is being closely watched in the Gulf, where companies have little recourse to orderly ways of dealing with insolvency.

Cash is king in the Persian Gulf emirate’s rebounding property market, limiting the power of regulators to control rising prices that fueled the last property bubble by imposing restrictions on mortgage loans to foreigners. Buyers from Iran to Russia to Greece are paying cash in as many as 70 percent of Dubai home purchases, up from 49 percent in 2007, according to researcher Reidin.com, Bloomberg reported.

Dubai-based property lender Amlak Finance is in talks with creditors to restructure debts of around AED7bn (US$1.9bn), in the latest attempt to resurrect a victim of Dubai's property crash, ArabianBusiness.com reported. The sharia-compliant mortgage lender is negotiating with a creditor committee of six members, which includes two government-owned funds as well as Dubai's largest lender and its biggest Islamic bank, two sources with knowledge of the matter said. They spoke on condition of anonymity as the information is not public.

Bahrain-based Gulf Air will launch a major cost-cutting plan and focus increasingly on regional services, Air Transport World reported. In a statement issued Tuesday, the carrier said it intends to strengthen its Middle East and North African (MENA) services, target 24% in cost savings by year end and simplify its fleet structure. The restructuring was foreshadowed by October’s announcement of a BD185 million ($494 million) government cash injection in the loss-making national carrier. Lawmakers also talked of halving the current 3,800 workforce and reducing its fleet from 39 to 20 aircraft.

Property buyers using mortgages will have to stump up more than twice as much out of their own pocket to make a down payment as a result of the Central Bank’s new mortgage rules, new research found yesterday, The National reported. Buyers’ self-funding requirements will rise by 100 per cent for nationals and 150 per cent for expatriates, said Chiradeep Ghosh, an analyst at Securities and Investment Company (Sico), a Bahrain-based investment bank. Bankers are to meet tomorrow to formulate a response to the government circular.

The key to preventing a messy devaluation of Egypt's pound may lie with the country's households, whose dollar holdings are being eyed by foreign investors as a critical gauge of trust in the authorities, Reuters reported in an analysis. Countless emerging market crises have shown over the decades that it is not the withdrawal of foreign investors from a market but the flight of local households and businesses from a currency that is instrumental in its collapse. Egypt, despite months of upheaval, is not there yet.

Egypt's currency plumbed new depths yesterday as policy makers tried to reassure the public and investors that they can prevent a full-scale currency devaluation while still repairing Egypt's budget deficit, the Wall Street Journal reported today. The country's worsening economic crisis comes after President Mohammed Morsi isolated his political opponents to push through Egypt's Islamist-leaning constitution, sparking weeks of riots, protests and political uncertainty.

The United Arab Emirates plans to restrict mortgages for foreigners to 50 percent of the property’s value, threatening to derail a nascent recovery in Dubai home prices after more than three years of declines, Bloomberg News reported today. U.A.E. citizens can get as much 70 percent of the value of a first house and 60 percent for a second, according to guidelines issued by the central bank and obtained by Bloomberg News. Foreigners can get mortgages of as much as 40 percent of the value of a second property, according to the document.

Dana Gas PJSC, whose bondholders include BlackRock Inc and Ashmore Group Plc, completed the restructuring of $920 million of Islamic bonds after agreeing to pay twice the average yield on emerging markets corporate sukuk, Bloomberg Businessweek reported. Dana Gas, which missed sukuk payments in October, will pay bondholders $70 million in cash and split the remaining Shariah- compliant debt into $425 million of convertible bonds and an ordinary sukuk of equal value, the United Arab Emirates fuel producer said in a statement.

Global Investment House KSCC signed formal agreements with all its creditors to restructure $1.7 billion of debt after the Kuwaiti investment bank won a U.K. court’s approval and its shareholders agreed to delist stock, Bloomberg reported. The company’s core business will comprise about $3.5 billion of assets under management, investment banking and brokerage businesses, Global said in a statement distributed via the Regulatory News Service today. The majority of non-core investment and real-estate assets will be transferred to a special purpose entity, it said.