UAE-based budget carrier Air Arabia, the Arab world’s largest listed carrier, announced its intentions to build a new hub in Egypt that would offer connections to Europe, Africa and the Middle East, one month after formalizing a partnership with Egypt’s Travco Group, the Middle East’s largest travel and hospitality group.  “At a time when the global aviation industry is witnessing serious challenges as a consequence of the worldwide financial crisis, we continue to move forward with our strategic expansion strategy, as demonstrated by this important announcement,” said Air Arabia Chairman Sheikh Abdullah Bin Mohammed Al Thani.

Despite the airline industry’s overall close historical correlation with broad market indices, “budget travel” represents an industry subgroup that, from an investment standpoint, can be as good a defensive play as any medical and consumer product company, brewery or tobacco firm.  Air Arabia may be a case in point, having been named the

Dubai’s government returned to the open bond market upon a growing sense that the notoriously ‘profligate’ emirate–as at least one analyst has previously criticized it in comparison to its more steady, oil-fueled sibling Abu Dhabi–can be trusted not to default on its $80bn or so of outstanding debt. On the heels of last week’s proposed Euro Medium-Term Note (EMTN) program which seeks to raise 6.5bn, divided into four billion dollars in EMTN and 2.5-bn in Islamic bond issue, or sukuk, the government on Wednesday successfully placed nearly $2 billion in new five-year Islamic bonds–divided into both a dollar and dirham tranche–the biggest sukuk sale from the Gulf region this year. Pricing was set at 375 basis points plus/minus 10 points over mid-swaps for the dollar tranche, and with the same spread over three-
month Emirates Interbank Offered Rate, or EIBOR, used for the
 dirham

Euromoney reports the launch of London-based Alcantara Asset Management’s Russia and CIS Fixed Income Opportunities Fund, which will reportedly focus on relative value and long-only opportunities in the fixed income markets in Russia, Ukraine and Kazakhstan, and which will be lead by the firm’s founders, former JPMorganers Sergey Grechishkin and Andrei Taskin.  “Relative value”, a strategy which aims to take advantage of temporary mispricings between two related and often correlated securities, came to into question during the latest economic crisis, as “Black Swan” events in practice tend to exacerbate rather than minimize such pricing anamolies between assets.  However, the dual-strategy fits the current economic climate nicely, explained Grechishkin, which had trended higher for months but is on the cusp of what many feel is an imminent correction: ”Our actively-managed long strategies take advantage of trending markets when associated with economic recovery, as well as market positioning. Our relative value strategies generally benefit

There is loads of great information and commentary on the entire gamut of emerging and frontier markets over at MyStockVoice.com, headed by a Facebook connection of mine, Paul Harper, whose knowledge of emerging telecoms in particular is probably second to none.

Interesting piece from MEED vis a vis Tripoli’s $54bn, 20-year commitment to develop joint ventures with multinational firms in order to transform the Gulf of Sitre–and namely the oil-rich industrial cities of Marsa el-Brega and Ras Lanuf–into energy hubs founded on oil and gas processing and distribution, as well as into a resort destination.  The two cities lack proper downstream investment, but the potential returns on FDI are enormous, gushed a source from the U.S. engineering firm Fluor Corporation, which was commissioned to oversee the project:

“Libya is virgin territory. It is coming out of a long embargo so there are great opportunities. The energy cities have these anchor investments but also provide for secondary industries, which take products from the heavy industries and produce plastics, for example. They also provide work for industrial and construction services. There is a much greater, wider and more open opportunity for investment, from oil

In upgrading Orascom Construction Industry (OCI)–Egypt’s largest listed builder and also the country’s biggest producer of nitrogen fertilizers–local investment bank CI Capital noted that the firm’s net EBITDA is largely a function of fertilizer prices, which most analysts expect to rise up to a further 40% in 2010. “We believe OCI’s 2010 fertilizer margins will be supported by a number of factors, including fertilizer price increases, the establishment of strategic alliances with global fertilizer distributors and production capacity growth,” CI’s report stated, while forecasting an increase in earnings for the company from $427.8m in 2009 to $668.9m in the coming year.

Sticking with OCI, last month Citigroup name the company as one of its twelve “long-term” emerging market plays. “The construction company enjoys many long-term qualifications. Its construction division dominates approximately 2.5% of total developments under construction in the GCC region. The division also grows

Investment firm Kuwait Projects Co.’s (KIPCO) seven-year, $500 million benchmark bond–which featured a fixed 8.875% rate and were priced at a spread of 608 bps above the USD mid-swap curve, fetched orders in excess of $3.3 billion this past week, signaling further maturation of the Gulf’s debt markets.   The bond was not only the first to come out of Kuwait this year, but it was also the first international bond of the year to be issued by a Gulf-based private sector firm.  KIPCO owns stakes in 50 companies and operates in 21 countries, and this past spring announced that it would “move ahead with plans to sell pension products worth up to $500 million in the Middle East over the next five years, and launch an insurance firm in Algeria [later in the year].”

Earlier this year the IMF stated that debt securities form just 3% of the Middle

A recent FT piece quoted Bank of America Merrill Lynch analysts who estimate that Oman’s real economic growth rate will “continue to be relatively healthy, at 4% this year and 5.4% in 2010.”  And while down from an estimated 6.2% growth of last year, the bank concluded that “in the region this [growth] will be outdone only by the growth of gas-powered Qatar.”  Vis a vis the banking sector in particular, the article noted that “credit growth at commercial banks has slowed to 21% in June, down from a peak of 55% in 2008, but banks have continued to lend at a healthier clip than in most Gulf countries.”

Omani banking–and moreover the entire country’s economic recovery–runs through Bank Muscat–recently recommended by investment bank EFG Hermes, which cited the firm’s “commanding market share of 44% of the banking sector’s assets and

According to many analysts, global sukuk issuance may receive better pricing than other types of bonds given the relatively comfortable liquidity levels of Islamic institutions vis a vis their conventional counterparts.  For instance, the Abu Dhabi-based Tourism Development & Investment Company (TDIC), whose inaugural $1bn conventional bond tranche under a$3bn Global Medium Term Note (GMTN) Program this past summer was oversubscribed while being priced to yield 390 basis points over U.S. Treasuries, is hoping to raise close to another $1bn for general corporate purposes, per two unnamed bankers.  Among other current endeavors, TDIC is working on “spin-offs” of the Louvre and Guggenheim museums in the UAE capital.  Additionally, last month the Jeddah-based Islamic Development Bank raised $850 million through a five-year sukuk priced at par that yielded 40 basis points over five-year mid-swaps, and 77 points over five-year benchmark U.S. Treasuries respectively.  Meanwhile, ratings agencies Fitch and Standard & Poor’s both

Douglas Clayton’s Leopard Capital, which last year launched Cambodia’s first multi-sector investment fund, announced the launch of a Leopard Sri Lanka Fund LP for early 2010.   “After several decades of civil war, peace has finally returned to the beautiful island of Sri Lanka, and a new investment cycle and growth upswing has begun.  Leopard Sri Lanka Fund will provide expansion capital and strategic guidance to mid-market Sri Lankan companies, and also help some expand their businesses into other frontier economies,” the firm notes.  Leopard Sri Lanka will be headed by Colombo-based managers Nirosh De Silva and Ramanan Govindasamy.

Investor confidence in the island is high, as country visits surged this summer and plans emerged to expand hotel and resort facilities.  Moreover, official reserves surpassed the $4 billion mark in September–roughly equivalent to over 4.4 months of imports–and is Sri Lanka’s highest ever reserves level.  The Central Bank noted