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Kuwait Financial Centre “Markaz” GCC Daily Fixed Income Report – 25 January 2012 News Update UAE Central Bank At Ease On Inflation- The UAE Central Bank is not worried about inflation this year, predicting it could average around 2%, its governor Sultan Nasser Al Suweidi said. “There are no reasons to worry about inflation at this point in time because the sources of inflation are under control,” he told Reuters. “As long as the real estate sector is under pressure, it [inflation] is not likely to go up, hovering around 2% in 2012.” Saudi Interbank Rate Rises To 3-Year High On Europe- Saudi Arabian bank borrowing costs surged to the highest in almost three years on concern Europe‟s debt crisis may worsen, raising the cost of funding for businesses in the kingdom. The three-month Saudi interbank offered rate, the average rate at which banks in the world‟s largest oil exporter lend to each other, jumped 21bps since Sept. 26 to 0.81% yesterday, the highest since June 2009. The three-month London interbank offered rate in US dollars was at 0.56% yesterday, up 20bps over the same period. The gain is “mainly due to the increase in dollar Libor, stemming from greater bank risk aversion due to concerns about the problems in the euro zone,” Paul Gamble, head of research at Jadwa Investment, said on Jan 23. “It‟ll affect the price that banks charge for loans, as most companies borrow at a spread over Libor.” BoA: Dana May Restructure Bond As Debt Weighs On Stock- Dana Gas may restructure its $1bn Islamic bond maturing in October as the sukuk repayment weighs on its shares, Bank of America Corp. said. BofA cut Dana Gas shares to “underperform” and lowered the price estimate to 40 fils from 65 fils because of “a higher discount rate on the Egyptian operations, delays to exploring the Kurdish portfolio” and as the sukuk restructuring keeps the shares “depressed.” Dana Gas, which gets most of its output from Egypt and the Kurdish region of northern Iraq, said on Jan. 17 that it will meet its debt obligations. The company appointed a financial adviser and will provide an operational update Jan. 31. It got a total of $177mn in payments from Egypt and the Kurdish region last year. Fitch: Sukuk Demand Still Outweighs Supply- Fitch Ratings says plans by sovereigns outside the Middle East and other largely Islamic regions to tap the sukuk market could meet pent-up demand from Islamic institutional investors and banks to diversify their bond holdings, making the sukuk market a useful source of additional funding over time. The opportunity to buy shariah-compliant debt from investment grade sovereigns that have not yet tapped the market would be likely to generate strong investor appetite. Supply has got off to a strong start in 2012, with the General Authority for Civil Aviation of Saudi Arabia bringing a government-guaranteed deal that could pave the way for more issuance from the Kingdom, including the sovereign.

Select GCC Bond and Sukuk Prices (24 January 2012) Type Bond Bond Bond Bond Bond Bond Bond Bond Sukuk Sukuk

Name State of Qatar State of Qatar Emirate of Abu Dhabi Emirate of Abu Dhabi Mubadala Development Co. Mubadala Development Co. Qatar Telecom Qatar Telecom Aldar Properties DP World Ltd

Maturity Size (Mn) Rating 9-Apr-14 2,000 AA/Aa2 9-Apr-19 1,000 AA/Aa2 8-Apr-14 1,500 AA/Aa2 8-Apr-19 1,500 AA/Aa2 6-May-14 1,250 Aa3/Aa2 6-May-19 500 Aa3/Aa2 10-Jun-14 900 A/A2 10-Jun-19 600 A/A2 27-May-14 1,500 BB-/B1 2-Jul-17 1,500 BBB-/Baa3

Bid Price 106.775 117.233 108.250 119.250 107.230 118.877 108.500 122.130 109.971 102.053

Ask Price 107.381 117.988 109.000 119.750 107.868 119.862 109.171 122.956 110.728 102.925

Bid Yield 1.975% 3.789% 1.646% 3.677% 2.449% 4.544% 2.755% 4.331% 6.078% 5.802%

Ask Yield 1.703% 3.679% 1.314% 3.606% 2.172% 4.400% 2.475% 4.214% 5.747% 5.616%

HSBC/NASDAQ Dubai GCC Sukuk & Bonds US Dollar Index Sukuk 23-January-12 31-December-11 Conventional 23-January-12 30-December-11

Total Return 133.15 133.00 141.70 141.59

3.54 3.59

4.38 4.31

331.01 312.20

Clean Price 3.93 95.55 3.99 95.79

5.41 5.26

5.01 5.07

316.15 322.59

7.56 7.31

Duration Yield

Spread

Life

Coupon Total Market Cap

98.22 98.53

5.06 5.06

141.85 142.39

5.53 5.63

871.84 808.83

Interbank Rates (%) SAIBOR KIBOR BHIBOR QATAR AEIBOR LIBOR EURIBOR

1-Month 25/01/12 31/12/11 0.5256 0.5188 0.5625 0.5625 0.8750 0.8500 0.6300 0.4300 0.9813 0.9750 0.2753 0.2953 0.6900 0.9643

U.S. Treasuries (24 January 2012) 3-Month 2-Year 3-Year 5-Year 10-Year 30-Year

Coupon 0.000 0.250 0.250 0.875 2.000 3.125

Equity Market Snapshot Abu Dhabi SE Bahrain SE Dubai SE Kuwait SE Muscat SE Qatar SE Saudi SE

Last Close 2,352.74 1,141.15 1,340.70 5,787.80 5,597.84 8,409.15 6,460.55

3-Month 25/01/12 31/12/11 0.8113 0.7800 0.8125 0.8125 1.2750 1.2583 1.0300 1.1000 1.5388 1.5200 0.5591 0.5810 1.0989 1.2921

Price 0.035 100.008 99.625 99.875 99.438 99.531

Price Change -0.003 -0.008 -0.004 -0.020 -0.023 0.008

1 Day Change 0.4% 0.3% 1.7% 0.6% -0.1% -0.3% 0.1%

YTD Change -1.7% 0.1% 0.8% 0.1% -1.8% -4.5% 0.8%

25/01/12 1.0488 1.3125 1.9750 2.2400 1.9850 1.1085 1.7607

1-Year

31/12/11 1.0400 1.3125 1.9583 2.1500 1.9725 1.1281 1.9134

Current Yield (%) Yield Change (%) 0.038 0.000 0.248 2.425 0.378 0.737 0.902 0.545 2.064 0.173 3.151 0.039

Crude Oil Brent WTI OPEC

Price 110.44 99.04 111.78

1 Day ∆ 0.37% 0.09% 0.37%

Gold Spot $/OZ

Price 1,665.80

1 Day ∆ 0.02%

GCC Sovereign Ratings Moody’s S&P Abu Aa2 AA Dhabi

Fitch

Bahrain Baa1 BBB

BBB

Kuwait Aa2

AA

AA NR

AA

Oman

A1

A

Qatar

Aa2

AA

NR

KSA

Aa3 AA-

AA-

UAE

Aa2

NR

NR

GCC Currencies Currency

USD 1-Day ∆

KWD

0.2784 (0.0003)

SAR

3.7503

0.0000

BHD

0.3770

0.0000

QAR

3.6413

0.0001

OMR

0.3850

0.0000

AED

3.6730

0.0000

EUR/USD 1.3026

0.0004

JPY

0.1600

77.8800

USD 5-Year CDS Abu Dhabi Dubai

YTD Change

140.560

10.2%

443.340

-0.4%

Bahrain 420.000

9.6%

Qatar

140.680

10.4%

Saudi

141.240

9.9%

Egypt

575.875

-10.0%

Lebanon 494.995

4.9%

Turkey

290.360

-0.3%

China

136.345

-7.4%

France

172.085

-21.7%

Germany 90.600

-11.3%

Japan

132.335

-7.6%

UK

80.660

-17.3%

US

45.610

-6.9%

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.


DFIU 25012012