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Middle East & African Monitor – 03 October 2017

  • Deadline For US To Certify Iranian Compliance With Nuclear Accord Approaches.
  • Production To Restart At Libyan Oilfield After Yet Another Disruption.
  • Moodys Set To Lower Kenya Ratings.
  • QIA Ponders Further Asset Sales.
  • Abu Dhabi & Jordan Conduct Fresh Bond Issuances.
  • Moroccan CB Governor “Disappointed” With Delay Of MAD Liberalization Program.
  • Richard Branson To Invest In Saudi Arabian Tourist Destination.
  • ADGM Now A Recognized Netting Jurisdiction.
  • Egypt’s FX Reserves Rise.

REGIONAL COMMENTARY

Deadline For US To Certify Iranian Compliance With Nuclear Accord Approaches.
The US administration has until the 15th of October to confirm whether or not it believes that Iran is still in compliance with the conditions of the JCPOA nuclear agreement signed back in 2015. As we have mentioned in our previous comments on the subject, a US law requires the President to notify congress on the status of this compliance every 3 months, however statements made by Trump and some of his advisors pre-and-post last year’s US election have indicated that there is a fair chance he will not certify such compliance this month and then allow congress decide on any potential consequences for this (such as fresh sanctions) within a fixed 60 day time period. During a speech at the UN last month, Trump claimed that “The Iran deal was one of the worst and most one-sided transactions the United States has ever entered into. Frankly, that deal is an embarrassment to the United States, and I don’t think you’ve heard the last of it, believe me.” In response to this a senior member of Iran’s Revolutionary Guard, Hossein Salam, was quoted by his country’s state media outlets as saying; "If you intend to abort the deal, you'd better know that we pray God for this, because we would make better progress without the JCPOA."

Production To Restart At Libyan Oilfield After Yet Another Disruption.Protests undertaken last Sunday by a local militia group who were demanding compensation for their purported provision of security at Libya’s giant Sharara oil field since 2014, resulted in yet another shutdown of this important facility and took around 230,000 bpd of output offline. While this latest dispute has apparently since been resolved and Sharara due to restart pumping today, it underlines the ongoing stability challenges Libya faces and the difficulty in forecasting accurate crude output for the country. The head of Libya’s National Oil Company, Mustafa Sanalla, was quoted as saying yesterday that this most recent disruption had cost the company EUR 14 mio and proposed that any future attempts to block the country’s oil production should be made a criminal offence. "The closure of the oilfield of Sharara has cost us huge financial losses. It is regrettable as the country's oil production comes with contract obligations with foreign companies and contributes to operation of power plants and factories inside Libya,” he stated.

Moodys Set To Lower Kenya Ratings.
Moodys has placed Kenya’s B1 long-term issuer rating on review for a potential downgrade. In a statement the ratings agency said its main motives for initiating the review were; the country’s large financing needs, high primary deficits and borrowing costs which would continue to see overall government debt expand, as well as a lack of clarity over the direction of future government policies due to ongoing political upheaval since the annulment of the result of August’s national election.

QIA Ponders Further Asset Sales.
According to a recent Bloomberg article the Qatar Investment Authority is apparently considering selling off more of its foreign assets and will avoid any major fresh investments in the near term. In recent months the country’s sovereign wealth fund had already reduced some of its direct stakes in firms such as Rosneft PJSC, Credit Suisse and Tiffanys. In January this year the QIA was estimated to have around US$335 bio in assets making it the 14th largest such fund in the world. Meanwhile Qatar recorded a 2.70% contraction of its mining sector, (including oil and gas production) during Q2 of this year. This in turn weighed on overall GDP which rose by just 0.60% for the same period and its slowest rate since 2010.

Abu Dhabi & Jordan Conduct Fresh Bond Issuances.
Abu Dhabi is set to price today a 5Y, 10Y and 30Y bond issuance with an initial price guidance of UST+85bp, +105bp and +150bp for each respective tenor. The market expects the total issue size to be up to US$10 bio. Meanwhile Jordan priced a 30Y US$1 bio bond yesterday at 7.50%. Abu Dhabi is currently rated at Aa2 by Moodys and AA by FITCH and S&P, while Jordan’s ratings are B1 (Moodys) and BB- (S&P).

Moroccan CB Governor “Disappointed” With Delay Of MAD Liberalization Program.
The governor of Morocco’s Central Bank, Abdellatif Jouahri, was quoted by the ‘Morocco World News’ website expressing his “disappointment” that a program to begin liberalizing Morocco’s FX regime, which was due to begin in June this year, had been delayed by the government. “Perhaps we took too much time before trying to make the meaning of this reform accessible to the general public. But be careful, we have no other choice but to advance with these reforms,” Jouhari stated, adding that; “If the government has postponed this reform to better study and support it, then that’s a positive thing. However, if we want to move towards a better distribution of income and the emergence of the economy, the immobility on implementing a flexible exchange rate regime is not a viable option.”

Richard Branson To Invest In Saudi Arabian Tourist Destination.
Sir Richard Branson’s Virgin Group is reportedly preparing to invest in a major tourism project which would see a series of luxury hotels and resorts built along a Red Sea coastal lagoon in in Saudi Arabia. “Branson has become the first international investor to commit to involvement in the Red Sea Project and nearby Madain Saleh, another prime site for the development of tourism, both domestic and international," a statement issued by the Kingdom’s Ministry for Culture and Information read.

ADGM Now A Recognized Netting Jurisdiction.
For those of you who may have missed the announcement last week, Abu Dhabi’s International Financial Centre (ADGM) is now an ISDA recognized netting jurisdiction. For more details you can access Abu Dhabi Global Markets press release on the subject here:ADGM Netting.

Egypt’s FX Reserves Rise.
Egypt’s foreign exchange reserves rose to US$36.535 bio last month from US$36.14 bio in August. Meanwhile the country’s Finance Ministry said that foreign investment in Egyptian securities totaled US$18 bio in September.

03-10-2017

AND FINALLY…
Did you know that in late 1944 a German submarine torpedoed a US freighter off the coast of Oman? Amongst the cargo that reportedly went down with the ship were 750 wooden boxes containing three million silver Saudi one-riyal coins, minted for the Saudi government in the United States. The coins had been destined to pay workers building the refinery at Ras Tanura.

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