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Kuwait Financial Centre “Markaz” MENA Daily Fixed Income Report –17 October 2012 News Update GCC Bond & Sukuk: Best and worst Performers (17 October 2012) Fitch Rates QIIB's USD700m Fixed Rate Trust Certificates at 'A-'Daily Best daily Performers Worst daily Performers Fitch Ratings has assigned Qatar International Islamic Bank 's ( QIIB ; the change originator; 'A-'/Stable/'F2') USD700m five year trust certificate (Sukuk) INTPET 5 1/2 03/01/22 0.83% IRAQ 5.8 01/15/28 0.81% INTPET 6 7/8 11/01/41 issue a final rating of 'A-'. The issuing entity is QIIB Sukuk Funding Ltd. NBADUH 0 02/28/18 0.73% COMQAT 7 1/2 11/18/19 The final rating is assigned following the receipt of final documents INTPET 5 11/15/20 0.41% QTELQD 5 10/19/25 conforming to the information previously received and the closing of the INTPET 6 7/8 03/14/26 QGTS 6.067 12/31/33 0.37% IDB TRUST SERVICES LTD 2015 transaction. The rating for the certificate is the same as the expected Monthly Best monthly Performers Worst monthly Performers rating assigned on 4 October 2012. Fitch has aligned the issue rating with change QIIB 's Long-term (IDR) as the Sukuk structure is viewed as an originator- RASGAS 6.332 09/30/27 6.00% NBADUH 5.01 05/22/42 YUKSEL 9 1/2 11/10/15 4.58% NBADUH 4.365 08/09/32 backed/asset-based structure. CBB Sukuk Al-Ijara Fully Subscribed- The Central Bank of Bahrain (CBB) announces that the monthly issue of the short-term Islamic leasing bonds, Sukuk Al-Ijara, has been fully subscribed by 263%. Subscriptions worth BD52.5 million were received for the BD20 million issue, which carries a maturity of 182 days. The expected return on the issue, which begins on 18th October 2012 and matures on 18th April 2013, is 1.19%. The Sukuk Al-Ijara are issued by the CBB on behalf of the Government of the Kingdom of Bahrain.

QGTS 6.267 12/31/33 BHRAIN 5 1/2 03/31/20 INTPET 6 7/8 11/01/41

2.85% 2.73% 2.69% YTD change 3.64% 3.37% 3.27% 3.20% 3.17%

Best YTD Performers

IRAQ 5.8 01/15/28 NBADUH 4.8 09/15/36 DUBAI GOVT INT'L BONDS 2013

Worst YTD Performers

Daily change -0.54% -0.31% -0.31% -0.21% -0.06% Monthly change -0.73% -0.64% -0.63% -0.51% -0.13% YTD change -3.32% -3.08% -2.63% -1.94% -1.84%

NBADUH 4.8 09/15/36 DANA GAS SUKUK LTD 2012 INTPET 6 7/8 11/01/41 TAQAUH 5.62 10/25/12 MBPSFN 11 1/4 11/15/15 DUBAI GOVT INT'L BONDS 2014 INTPET 6 7/8 11/01/41 NBADUH 5.01 05/22/42 NAKHL 10 08/25/16 TAQA ABU DHABI NATL ENER 2013 Qatari Banks May Step Up Bond Sales, Barclays’ Says- Qatari banks Source: Bloomberg, Markaz Analysis HSBC/NASDAQ Dubai Middle East US Dollar Sukuk /Bond Index may increase bond sales as they seek long term funding for government Total Clean Duration Yield Spread Life Coupon Total Market Cap and state-related companies, Barclays Plc‟s research director Alia Sukuk Return Price Moubayed said. “We are likely to see more issuance from Gulf Cooperation 12-Oct-12 164.021 5.052 3.69 240.875 6.40 105.270 5.39 1508.62 Council banks, particularly in Qatar,” she said. “They are borrowing on a 31-Dec-11 148.84 4.99 5.07 326.79 6.80 99.35 5.81 1157.44

short term from the interbank market and they are likely to try to reduce it Interbank Rates (%) by basically going to the capital market.” 3-Month Fitch Carrot Heralding Lowest Yield in 21 Months- Turkey will probably sell notes at the lowest cost in 21 months as prospects of a credit-rating upgrade and an interest-rate cut this week whet investor appetite for the second-highest yield in major emerging markets. Turkey will sell 2.5 billion liras ($1.4 billion) of benchmark September 2014 notes on Wednesday in this month‟s only auction.

SAIBOR KIBOR BHIBOR QATAR AEIBOR LIBOR EURIBOR Cash-strapped Morocco to spend more in 2013- Cash-strapped JDIBOR Morocco has budgeted subsidy spending on energy and staples next year TRLIBOR

close to its level this year, in a move that may upset creditors and investors ahead of a maiden dollar sovereign bond. Last week, Standard & Poor's downgraded Morocco's outlook to 'negative' from 'stable' and warned it could lower its 'investment grade' rating citing the need to significantly narrow fiscal and current account deficits. On Tuesday, alIttihad al-Ichtiraki said subsidy spending was budgeted at 45.9 billion dirhams ($5.35 billion) for 2013 versus 46.5 billion budgeted for 2012 and of which close to 92 percent had already been used by end-September.

17/10/12 0.9662 0.8125 1.2250 1.2285 1.3062 0.3342 0.2100 5.0130 6.6426

31/12/11 0.5188 0.5625 0.8500 0.4300 0.9750 0.2953 0.9643 3.8410 11.2750

6-Month 17/10/12 31/12/11 1.0075 0.7800 1.0625 0.8125 1.5367 1.2583 1.3857 1.1000 1.4712 1.5200 0.5959 0.5810 0.4150 1.2921 5.4280 4.2380 7.1637 11.316

1-Year 17/10/12 31/12/11 1.1350 1.0400 1.3125 1.3125 1.9067 1.9583 1.7357 2.1500 1.6000 1.9725 0.9360 1.1281 0.6540 1.9134 5.9380 5.2000 7.5841 11.3743

U.S. Treasuries 17 October 2012 3-Month 2-Year 3-Year 5-Year 7-Year 10-Year 30-Year

Current Yield (%) 0.10 0.15 0.34 0.65 1.07 1.65 2.82

1-Day ∆ (%) 0.005 0.000 -0.005 -0.005 -0.005 -0.005 -0.091

Currency KWD SAR BHD QAR OMR AED EGP JOD EUR/USD

USD 0.2806 3.7502 0.3770 3.6404 0.3850 3.6730 6.1004 0.7073 1.2951

1-Day ∆ (0.0004) (0.0001) (0.0001) 0.0001 0.0001 0.0001 0.0011 (0.0001) 0.0023

1 Year (%) -1.799% 0.003% -0.022% 0.022% -0.005% 0.000% -2.119% 0.113% -6.091%

MENA Sovereign Ratings Moody’s S&P Fitch Abu Aa2 AA AA Dhabi Bahrain Baa1 BBB

BBB

Kuwait

Aa2 AA

AA

Oman

A1

NR

Qatar

Aa2 AA

NR

KSA

Aa3 AA-

AA-

UAE

Aa2 NR

NR

Egypt

B2

B

B+

Lebanon B1

B

B

Turkey

BB

BB+

Tunisia Baa3 BB

BBB-

Ba1

A

Morocco Ba1 BBB- BBBJordan

Ba2

BB

NR

China

Aa3 AA-

A+

UK

Aaa AAA

AAA

US

Aaa AA+

AAA

USD 5-Year YTD CDS Change Abu 106.165 -16.2% Dhabi Dubai 271.335 -37.6% Bahrain 235.000 -37.3% Qatar Saudi Egypt

106.865 -16.1% 84.810

421.440 -33.2%

Lebanon 430.000 Turkey Iran

-33.2%

-6.6%

157.390 -45.1% 33.570 -12.5%

Morocco 238.560 -10.2% China

80.600 -45.2%

France

94.000 -57.2%

Germany 44.140 -56.5% Japan

82.500 -42.6%

UK

42.820 -56.1%

US

47.500

-3.0%

This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz) , which is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz “ .This Report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to its accuracy or completeness. Markaz has no obligation to update, modify or amend this report.For further information, please contact „Markaz‟ at P.O. Box 23444, Safat 13095, Kuwait. Tel: 00965 1804 800 Fax: 00965 2245 0647 Email: research@markaz.com

A number of sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of this report.

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