Lebanon’s central bank aims to keep the exchange rate of its pound currency stable in 2019, the bank’s governor said on Wednesday. Riad Salameh also said Lebanese bank deposits climbed by 3.5 percent in 2018, Reuters reported. The comments were his first in public since remarks by the finance minister last week about Lebanon’s public debt triggered concerns that the debt might be restructured, leading to a sell-off in the country’s dollar-denominated sovereign bonds.
North Africa/Middle East
In a related story, Reuters reported that Etihad Airways has offered to invest in debt-laden Indian carrier Jet Airways Ltd at 150 rupees ($2.11) per share, along with an immediate release of $35 million after certain conditions are met, CNBC-TV18 reported here on Wednesday, citing sources. The offer comes at a staggering 49 percent discount to Jet’s closing price of 293.70 rupees on Tuesday. Jet Airways shares tumbled after the report, falling as much as 7.5 percent to 271.75 rupees in their biggest intraday percentage loss since Dec. 10, 2018.
Cracks are starting to show in the United Arab Emirates’ banking sector as a property and retail slump take its toll on lenders, Bloomberg News reported. One of the country’s smallest banks is being bailed out, problem loans are expected to rise this year and lenders are exploring mergers to stay competitive. Slow property sales, higher interest rates and a rise in lending amid improved economic growth could mean provisions jump as much as a quarter, according to analysts.
Turkish billionaire Ferit Sahenk is in talks to sell some of Europe’s most famous luxury hotels to the investment firm owned by Dubai’s ruler as part of a debt restructuring, people with knowledge of the matter said. The discussions involve properties including the historic Capri Palace in Italy, the Aldrovandi Villa Borghese in Rome and Istanbul’s Grand Hyatt, the people said, asking not to be identified because the talks are private, Bloomberg News reported. Dubai Holding is doing due diligence on the Capri Palace and Aldrovandi, one of the people said.
Top Lebanese officials, including the president, the caretaker prime minister and the central bank chief, are scrambling to reassure bond investors panicking over the risk of debt restructuring after initial efforts at damage-control failed to calm markets, Bloomberg News reported. In a meeting on Sunday at the presidential palace, the officials said Lebanon was discussing how to reduce the budget deficit and implement fiscal reforms -- but would not restructure its debt.
Etihad Airways scrapped orders for Airbus SE jetliners and revealed plans to cut 50 pilot posts as the Persian Gulf carrier seeks to slim down operations amid mounting losses, Bloomberg News reported. Abu Dhabi-based Etihad canceled the purchase of 10 A320neo single-aisle jets, based on the latest monthly order figures from Airbus, while a letter to staff indicates that the flight-crew jobs, representing about 2.4 percent of pilots, will be eliminated by the end of this month.
Lebanon’s caretaker economy minister said there are no plans to restructure debt after the finance minister was quoted as saying the move was being studied, Bloomberg News reported. “There’s definitely no restructuring for debt,” Raed Khoury said Thursday in a phone interview. “Bondholders and depositors are extremely safe.” Lebanese dollar bonds due 2028 plummeted after Al-Akhbar newspaper cited Finance Minister Ali Hasan Khalil as saying planned fiscal reforms include a debt overhaul. Yields jumped the most since the notes were issued in 2015.
Abraaj Group, the private-equity firm that collapsed after defaulting on debt, will get a 70 percent stake in C&I Leasing Plc by converting a $10 million loan into equity in the Nigerian company, Bloomberg News reported. “Abraaj knows that pulling out $10 million will be detrimental to the growth of the business, so rather than cash out, they decided to convert,” C&I Chief Executive Officer Andrew Otike-Odibi said by phone from Lagos. Once done, C&I plans a rights issue or an initial public offering that may dilute Abraaj’s stake to about 30 percent, he said.
Commercial Bank of Dubai (CBD), which lent around $170 million to Abraaj, will take stakes in the troubled private equity firm’s funds which were offered as security against the debt, three sources familiar with the matter said. Dubai-based Abraaj, worth $13.6 billion, was the largest buyout fund in the Middle East and North Africa until it collapsed last year following turmoil triggered by a row with investors, including the Gates Foundation, over the use of their money in a $1 billion healthcare fund, Reuters reported.
Goldman Sachs Group Inc. still sees an imminent debt restructuring in Lebanon as unlikely but is already turning its attention to how much investors could recover as one of the world’s most indebted countries teeters on the brink of financial crisis, Bloomberg News reported. Under Goldman’s base scenario, foreign investors would recover 35 cents on the dollar, Farouk Soussa, an economist at Goldman Sachs, said in a report. But he said any debt overhaul would put the country’s banks first, meaning “the actual recovery value” would be significantly different to contain damage.