European bond and stock markets suffered a further fall yesterday as Gulf companies were warned they faced growing refinancing risks linked to US$25 billion (Dh91.8bn) in debt due next year.
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Yields on euro-zone sovereign debt widened further, reflecting investors' concern that the European crisis may spread.
Spanish bond yields reached 6.98 per cent, their highest level since 1997, at a 10-year auction. A French bond auction also reported elevated yields while stock markets declined across Europe.
In the Gulf, financing challenges are likely to be compounded by capital market rockiness, Standard & Poor's Ratings Services said in a research note yesterday.
"Standard & Poor's believes the region is therefore entering a challenging loan and bond refinancing cycle, especially given the ongoing volatility in capital markets and fears that slowing global economic growth is already curbing corporate debt issuance and heightening refinance risk in the region," the ratings agency said.
Bonds and sukuk of about $25bn in the region will mature next year, rising to about $35bn in 2014, S&P said.
Mirroring sluggish capital market activity globally, regional firms have been hesitant to issue bonds this year. A logjam that formed as a result of the Arab Spring has been worsened by the uncertainty sparked by the European sovereign debt crisis.
Dolphin Energy, a gas production and pipeline company based in Abu Dhabi, is among the companies that have delayed bond issues until market conditions improve.
The lack of action by companies with funding needs could "accentuate refinancing risks" for these players, S&P said. Instead, most are turning to banks to meet their financing needs.
However, many banks remain reluctant to lend as they concentrate on cleansing their balance sheets of bad assets after the global financial crisis.
"The UAE's banks are better prepared to face the fallout of the euro-zone debt crisis than during the financial crisis of 2008," wrote Capital Economics in a research note released yesterday.
"However, lending to the private sector is unlikely to return to healthy levels until 2013 at the earliest." As a result, UAE GDP growth is likely to trail that of other GCC states, notably Saudi Arabia and Qatar, it said.
Credit growth is expected to be largely generated by Abu Dhabi banks. Borrowing by the banking system has fallen over the past few years and the refinancing needs of local banks is largely manageable, S&P said.
Waning appetite for conventional bonds is encouraging some issuers to turn to the Islamic debt market, which has seen a sharp increase in activity this year. Abu Dhabi Commercial Bank has sold $500 million of five-year dollar-denominated Islamic bonds, Bloomberg News reported .
tarnold@thenational.ae
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Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
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Saturday, April 20: 11am to 7pm - Abu Dhabi World Jiu-Jitsu Festival and Para jiu-jitsu.
Sunday, April 21: 11am to 6pm - Abu Dhabi World Youth (female) Jiu-Jitsu Championship.
Monday, April 22: 11am to 6pm - Abu Dhabi World Youth (male) Jiu-Jitsu Championship.
Tuesday, April 23: 11am-6pm Abu Dhabi World Masters Jiu-Jitsu Championship.
Wednesday, April 24: 11am-6pm Abu Dhabi World Professional Jiu-Jitsu Championship.
Thursday, April 25: 11am-5pm Abu Dhabi World Professional Jiu-Jitsu Championship.
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The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
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