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Kuwait Financial Centre “Markaz” MENA Daily Fixed Income Report –18 October 2012 News Update Barclays recommends to Buy Dubai debt- The UK-based bank believes the region overall should benefit from global central banks' action which is fuelling liquidity apart from the region's own fundamentals. While Abu Dhabi and Qatar corporations have strong fundamentals, backed by massive government reserves, there is little headroom for growth there. "In the high-quality sovereign sector (Qatar, Abu Dhabi) and quasisovereign sectors, we think that room for further spread compression is limited and that absolute spread levels make the risk/reward profile tilted to the downside," said Aziz Sunderji, analyst at Barclays Capital. Qatar's inflation rate up 2pc in September- Qatar's inflation rate rose to 2 percent in September 2012 compared to the same period last year. The high inflation rate was driven by price increases in all the major groups, with the exception of rent, fuel and energy, which registered a drop of 0.1 percent. The highest increases were recorded in the "miscellaneious goods and services" group-4.1 percent.

GCC Bond & Sukuk: Best and worst Performers (18 October 2012) Daily change 1.50% 0.79% 0.70% 0.64% 0.63% Monthly change 6.00% 3.88% 3.71% 3.66% 3.25% YTD change 34.16% 31.40% 31.15% 30.85% 25.93%

Best daily Performers MBPSFN 11 1/4 11/15/15 NBADUH 0 02/28/18 DUBAIH 6 02/01/17 DEWAAE 7 3/8 10/21/20 DUGB 6.45 05/02/22 Best monthly Performers

RASGAS 6.332 09/30/27 RAS LAFFAN LNG 3 EMAAR SUKUK LTD ADIBUH 3.78 11/30/16 FGBUH 4 11/26/12 Best YTD Performers

Worst daily Performers NBADUH 5.01 05/22/42 GOBLT 0 05/15/12 NBADUH 4.8 09/15/36 NBADUH 4.365 08/09/32 IDB TRUST SERVICES LTD 2015 Worst monthly Performers

ISDB 1.775 10/27/15 ISDB 1.357 06/26/17 EIBUH 0 06/12/12 NBADUH 4.8 09/15/36 DUBAI GOVT INT'L BONDS 2013 Worst YTD Performers

Daily change -0.82% -0.60% -0.57% -0.38% -0.06% Monthly change -1.76% -2.83% -0.59% -0.51% -0.13% YTD change -3.32% -3.08% -2.63% -1.94% -1.84%

RAK CAPITAL DANA GAS SUKUK LTD 2012 NBADUH 0 10/22/12 TAQAUH 5.62 10/25/12 FGBUH 4.046 01/18/17 DUBAI GOVT INT'L BONDS 2014 Arcapita moves ahead with the reorganization plan (Update)-The EMIRAT 0 06/15/12 NBADUH 5.01 05/22/42 Arcapita Bank BSC creditors‟ committee tied the Bahrainian investment SABIC 4 1/2 11/28/13 TAQA ABU DHABI NATL ENER 2013 bank up in knots over the timing and method for emerging from the Source: Bloomberg, Markaz Analysis Chapter 11 reorganization begun in March. To move ahead with a HSBC/NASDAQ Dubai Middle East US Dollar Sukuk /Bond Index Total Clean reorganization plan based on a new equity investment, Arcapita must Sukuk Duration Yield Spread Life Coupon Total Market Cap Return Price locate a new investor who deposits $250 million in cash or letter of credit 16-Oct-12 164.414 5.047 3.66 234.311 6.39 105.46 5.39 1511.78 by Nov. 1.Absent the required deposit, an order signed by the Manhattan 31-Dec-11 148.84 4.99 5.07 326.79 6.80 99.35 5.81 1157.44 bankruptcy judge on Oct. 12 requires Arcapita to abandon the idea of

reorganization and negotiate exclusively with the official creditors‟ Interbank Rates (%) 3-Month committee on a plan entailing “an orderly wind-down of their businesses 18/10/12 31/12/11 and assets.” GCC Sukuk Adds Most to Global Sales Since 2007-Gulf Islamic bond sales have contributed almost 50 percent, the most since 2007, to this year‟s record global issuance as governments exploit falling yields to build airports, power lines and sports facilities. Borrowers in the six-nation Gulf Cooperation Council have sold $19.2 billion of sukuk, about 60 percent of which were offered by sovereigns in Saudi Arabia, Qatar and Dubai, according to data compiled by Bloomberg. Regional sales are four times higher than in the same period last year. Egypt Likely to Maintain Benchmark Rate on Currency ConcernEgypt‟s central bank is likely to maintain its benchmark interest rate steady at its highest in over three years due to pressure on the local currency. The Central Bank‟s Monetary Policy Committee, headed by Governor Farouk al-Okdah, meets later today to discuss the deposit rate, currently at 9.25 percent, days before an International Monetary Fund delegation is due to arrive in Egypt to consider the country‟s $4.8 billion loan request.

SAIBOR KIBOR BHIBOR QATAR AEIBOR LIBOR EURIBOR JDIBOR TRLIBOR

0.9662 0.8125 1.2250 1.2285 1.3062 0.3342 0.2100 5.0130 6.6426

0.5188 0.5625 0.8500 0.4300 0.9750 0.2953 0.9643 3.8410 11.2750

6-Month 18/10/12 31/12/11 1.0081 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 18/10/12 31/12/11 1.1343 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 18 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

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-

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 102.440 -19.2% Dhabi Dubai 256.223 -41.6% Bahrain 220.000 -42.3% Qatar

USD 0.2806 3.7501 0.3770 3.6405 0.3850 3.6730 6.1049 0.7083 1.2951

1-Day ∆ (0.0004) (0.0001) (0.0001) 0.0001 0.0001 0.0001 0.0045 (0.0001) 0.0023

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

102.865 -16.1%

Saudi

83.810 -33.2%

Egypt

407.440 -36.2%

Lebanon 396.000 -16.6% Turkey Iran

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

Ba1

A

147.390 -45.1% 33.570 -12.5%

Morocco 220.155 -17.2% China

72.600 -45.2%

France

72.650 -66.2%

Germany 35.085 -65.5% Japan

79.500 -44.6%

UK

33.175 -65.1%

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.

DFIU18102012  

DFIU18102012

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